ADDRESSES, 


SPEECHES,  LECTURES, 


AND 


LETTERS 


UPON  VARIOUS  SUBJECTS. 


By  Hugh  McCulloch. 


Washington,  D.  C; 
Wm.  H.  Lepley,  Printer. 

1891. 


v^ 


\o 


.  «  •      J  .  •  •  • 


CONTENTS. 


PrKi^Ace 5 


PAGE 


Address  delivered  at  Fort  Wayne,  Ind.,  July  4,  1861  •••..••  13 
Address  delivered  at  Fort  Wayne,  Ind.,  October  11,  1865. .  37 
Speech  at  the  annual  meeting  of  the  Cobdeu  Club,  London, 

June  24,  1871 -: • •  •  •  •. •••     55 

vSpeech  delivered   at   a  Thanksgiving    banquet  given   by 

Cyrus  W .  Field,  London,  November  28,  1872 bi 

Letters  to  merchants  of  Cincinnati w 

Letters  written  for  the  Ne^w  York  Tribime: 

First  letter 9^ 

Second  letter 94 

Third  letter ^°° 

Fourth  letter ^°5 

Fifth  letter ^°^ 

Sixth  letter "3 

Seventh  letter 1^7 

Eighth  letter ^23 

Ninth  letter ^29 

Tenth  letter ^3^ 

Eleventh  letter ^43 

Twelfth  letter ^40 

Thirteenth  letter ^54 

Fourteenth  letter loj 

Fifteenth  letter i^^ 

Sixteenth  letter • •  •   i7» 

Speech  at  one  hundred  and  ninth  anniversary  banquet  at 

Delmonico's,  May  14,  1877 ••• ••• 187 

Address  delivered  at  Woodstock,  Conn.,  July  4,  1878 195 

Lectures  delivered  at  Harvard  University,  May,  1879: 

First  lecture— Money 221 

Second  lecture— Bi-metallic  Money 239 

Third  lecture— The  Representatives  of  Money.    259 

Fourth  lecture— The  National  Banking  System 272 

Fifth  lecture— National  Debts  and  Foreign  and  Do- 
mestic Exchange 289 

Sixth  lecture— Taxation 3o» 

Seventh  lecture— Capital  and  Labor 332 

Letter  addressed  to  the   Banquet  Association,    Saratoga 

Springs,  August,  1884 • •• 355 

Letter  to  the  Neiv  )  'ork  Times,  October  19,  1889 3^5 

Letter  to  the  Net,'  York  Times,  January  31,  1890 3^5 

Letter  to  the  \Vashingto7i  Post,  February  19,  1890 409 

Letter  to  the  Nezv  York  hidependent 4^7 

Index ^'^^ 


PREFACE. 


The  Addresses,  Speeches,  Lectures,  etc.,  etc.,  which 
appear  in  this  volume  have  been  selected  from  many 
others,  and  are  intended  to  be  preserved  in  this  form 
for  the  use  of  those  who,  years  hence,  ma}^  be  inter- 
ested in  what  is  substantially  a  record  of  my  feelings 
and  views  upon  important  subjects  in  very  interesting 
periods  of  our  national  history. 

The  addresses  delivered  at  Fort  Wayne,  Ind.,  in 
1861  and  1865  can  hardly  fail,  at  any  time,  to  be  inter- 
esting, as  they  present  the  prevailing  sentiment  of  the 
people  of  the  Northern  States  at  the  commencement 
and  the  close  of  the  civil  war.  The  letters,  which  were 
written  in  London  for  the  Nnv  York  Trilnme,  were 
copied  by  a  great  many  newspapers,  and  very  widely 
circulated  and  favorably  commented  upon  in  all  parts  of 
the  country.  They  were  written  and  the  Cambridge 
lectures  were  delivered  when  financial  and  economic 
questions  were  engaging  public  attention — questions  that 
have  lost  none  of  their  interest — the  definite  solution  of 
which  seems  to  be  far  in  the  future. 

THE  CURRENCY. 

upon  the  currency  question  I  have  spoken  at  consider- 
able length,  because  it  was,  and  still  is,  a  question  of 
supreme  importance.  A  sound  circulating  medium  is 
the  life-blood  of  commercial  nations.  In  speaking  of 
the  currency,  I  could  not  fail  to  express  my  views  upon 
the  legal-tender  notes.     These  notes,  when  they  were 


6 


issued,  were  considered,  properly  perhaps,  a  necessity, 
and  the  issue  of  them  was  advocated  solely  on  that 
ground.  They  have  been  a  popular  currenc3^  and,  if 
kept  within  the  present  limit,  they  might  be  beneficial. 
They  are,  however,  liable  to  the  serious  objection  of 
giving  to  the  people  false  opinions  of  the  character  of 
money,  and  the  more  serious  objection  of  being  unwar- 
ranted by  the  letter,  if  not  by  the  spirit,  of  the  Consti- 
tution. The  decisions  of  the  Supreme  Court  upon  the 
legal-tender  acts  clothes  Congress  and  the  Executive 
with  imperial  power — the  power  to  issue  notes  and  to 
make  them  lawful  money  and  a  legal  tender,  no  matter 
what  may  be  their  comparative  value  with  gold.  Accord- 
ing to  these  decisions,  the  law-making  authority  may 
rightfull}^  do  anything  which  is  not  actually  prohibited  by 
the  Constitution,  instead  of  being  limited  to  the  exercise 
of  such  powers  as  are  expressly  granted  or  fairly  infer- 
able. Before  those  decisions  were  pronounced,  the 
popular  understanding  was  that  the  Constitution  gave  to 
Congress  and  the  President  all  the  power  that  was  needed 
for  the  accomplishment  of  the  objects  for  which  the 
Government  was  created  and  could  be  safely  exercised. 
To  what  dangers  the  country  is  exposed  from  this  de- 
parture from  what  had  been  established  "landmarks" 
can  be  readily  comprehended. 

An  unanswerable  objection  to  the  issue  of  legal-tender 
notes  is  that  it  makes  the  Treasury  Department  a  bank 
of  issue,  in  which  every  voter  is  a  stockholder  and  of 
which  the  most  active  politicians  are  the  directors. 
That  its  management  will  continue  to  be  conservative 
and  wise  is  to  be  hoped  for,  rather  than  expected.  One 
thing  is  certain,  that  so  long  as  the  decisions  referred 
to  are  in  force  there  will  never  be  a  scarcity  of  lawful 
money  in  the  United  States.  The  indications  now  are 
that  by  the  payment  of  the  bonds  by  which  they  are 


secured  the  national  bank-notes  will  soon  be  withdrawn 
from  circulation  and  that  the  paper  circulating  medium 
of  the  country  will  consist  of  legal-tender  notes,  based 
upon  the  credit  of  the  Government,  and  silver  certificates, 
upon  neither,  or  both,  of  which  a  great  country  should 
be  dependent.  Of  the  two,  the  latter  are  the  least  ob- 
jectionable. They  are  bad,  because  silver  does  not  sus- 
tain permanent  relative  value  with  gold,  which  is  the 
only  true  standard  of  value  in  trading  and  commercial 
nations,  and  it  will  continue  to  be  of  fluctuating  value,  un- 
less the  leading  nations  should  agree  to  make  the  two 
metals  a  joint  standard,  of  which  there  is  little  proba- 
bility. For  these  reasons  silver  certificates  are  unfitted 
to  be  the  circulating  medium  of  the  United  States,  but 
they  are  less  objectionable  than  the  legal-tender  notes  ; 
there  is  nothing  deceptive  about  them;  they  can  never 
be  worth  less  than  silver;  they  teach  no  false  doctrines; 
they  express  upon  their  face  just  what  they  are — cer- 
tificates that  the  amount  which  they  represent  has  been 
deposited  for  their  security  and  redemption  in  the  Treas- 
ury of  the  United  States.  Very  different  is  the  character 
of  the  legal-tender  notes,  which  are  mischievous  in  their 
teachings  and  dangerous  to  business  enterprise,  because 
the  amount  that  may  be  put  into  circulation  depends 
upon  the  popular  feeling  that  may  be  brought  to  bear 
upon  the  law-making  power,  and  because  they  claim  to 
be  money,  which  they  are  not.  They  are  made  money 
by  statute  and  the  decisions  of  the  Supreme  Court,  but 
they  lack  the  elements  of  real  money;  they  can  be  re- 
pudiated and  rendered  valueless  by  the  same  power  that 
created  them.  There  is  no  money  but  gold  and  silver 
which  have  intrinsic  value  and  have  cost  in  labor  what 
they  represent.  Government  notes  are  demoralizing  and 
deceptive,  because  they  foster  the  popular  opinion  that 
money   can   be  created   by   statutes,  and   that  what  is 


8 


needed  to  make  it  plentiful  is  the  free  working  of  the 
printing  presses. 

THE    TARIFF. 

M}^  opinions  in  regard  to  the  tariff  have  undergone  no 
change  since  my  attention  was  called  to  the  subject 
more  than  half  a  century  ago.  Nothing  is  clearer  to 
my  mind  than  that  a  tariff  for  revenue  is  all  that  is 
warranted  by  the  Constitution,  and  that  while  in  the  in- 
fancy of  our  manufactures  it  was  proper  that  revenue 
duties  should  be  so  imposed  as  to  make  them  incident- 
ally protective,  the  time  has  long  since  come  that  im- 
port duties  should  be  reduced  to  the  lowest  point  con- 
sistent with  necessar}^  revenue.  The  United  States  is 
now  the  greatest  producing  country  in  the  world,  and 
consequently  it  has  the  deepest  interest  in  international 
trade.  All  restrictions  upon  free  exchanges  with  other 
nations  are  hostile  to  its  general  welfare.  The  tariff  is 
the  old  apple  of  discord  between  different  sections  and 
apparently  conflicting  interests,  and  it  will  be  as  long 
as  its  character  depends  upon  committees  of  Congress, 
which  have  neither  the  time  nor  the  intelligence  and 
freedom  from  partisan  politics  to  make  it  what  it  ought 
to  be — a  great  national  economical  question.  This  work 
4?jan  only  be  done  by  a  thoroughly  equipped  commission — 
a  commission  consisting  of  some  of  the  most  distinguished 
practical  economists,  who  have  no  party  or  sectional  in- 
terests to  serve,  whose  duty  it  should  be  to  secure  to  the 
Government  needful  revenue,  by  duties  upon  inports, 
which  should  not  favor  one  branch  of  industr^^  at  the 
expense  of  other  branches,  and  should  be  as  equal  in 
its  burdens  as  taxation  can  be  made.  I  do  not  hesitate 
to  say  that  our  protective  tariff  is  not  only  unnecessaril}- 
burdensome  upon  consumers  in  the  United  States,  but 
that  it  is  in  the  interest  of  Great  Britain  by  giving  to 
her  a  monopoly  of  the  South  American  trade,  by  which 
she  is  immensely  enriched. 


^ 


THE  FRANCHISK. 
I  have  said  something  upon  the  franchise,  but  not  asi 
much  as  its  importance  demands.  It  is  the  basis  of  our 
republican  institutions.  If  it  becomes  unsound,  the  whole 
superstructure  is  in  danger.  That  there  is  danger  in 
this  direction  is  manifest  to  all  observing  and  intelligent 
men.  We  have  invited  the  people  of  all  conditions  in 
foreign  lands  not  only  to  become  citizens  of  the  great 
republic,  but  law-makers  also.  We  ha\-e  extended  the 
franchise  to  millions,  the  larger  part  of  whom  have  no 
capacity  for  its  intelligent  exercise;  who  have  no  knowl- 
edge of  our  form  of  government,  and  no  stake  in  its 
preservation;  who  cannot  speak  our  language;  who  cast 
their  ballots  without  knowing  for  whom  or  for  what  they 
are  voting.  Among  them  are  anarchists,  who  are  hostile 
to  all  governments;  whose  doctrines  are  at  war  with  law 
and  order,  without  which  there  is  no  securit}-  for  prop- 
erty or  life.  But  this  is  not  all;  the  franchise  has  been 
bestowed  upon  the  recent  slaves,  very  few  of  whom  have 
an}'  qualifications,  except  what  the  statute  gives,  for  the 
exercise  of  the  highest  privilege  of  freemen.  If  the  ob- 
ject of  the  framers  of  the  Constitutions,  Federal  and 
State,  had  been  to  put  to  the  severest  test  the  strength 
of  republican  institutions,  they  could  not  have  done  :' 
more  effectually  than  it  has  been  done  b}^  cheapening 
the  franchise.  The  result  of  this  experiment,  for  such 
it  is,  which  is  at  work  in  all  the  States,  except  Rhode 
Island,  cannot  be  contemplated  by  even  the  most  hope- 
ful without  anxious  forebodings. 

THK   NATIONAL    PROGREvSS. 

The  present  century  has  witnessed  wonderful  changes 
in  all  civilized  countries.  These  changes  have  been  the 
most  marked  in  the  United  States,  as  might  have  been 
expected,  from  its  youth,  its  necessities,  the  extent  and 


10 


variety  of  its  agricultural  and  mineral  resources,  and  the 
energy  and  intelligence  of  its  people.  I  call  to  mind  very 
few  things  that  are  now  so  essential  for  international  in- 
tercourse, material  progress,  and  domestic  convenience, 
that  have  not  been  invented  and  come  into  use  within 
this  period.  Steam  boilers  had  been  known  for  centuries, 
but  the  first  iron  railroad  sanctioned  by  the  British  Par- 
liament was  in  1801.  The  first  vessel  propelled  by  steam 
w^as  in  1 81 4.  It  is  within  this  period  that  machinery  has 
been  made  to  do  the  work  of  hands  in  manufacturing, 
and  that  the  farming  implements  now  in  use  have  been 
invented.  When  I  went  to  Indiana  in  1833  the  sickle 
was  the  only  instrument  in  use  in  cutting  grain,  the 
scythe  in  cutting  grass;  and  yet,  notwithstanding  the 
labor-saving  inventions — the  substitution  of  machinery 
for  hands — the  wages  of  laborers  have  been  steadily  ad- 
vancing. The  economic  advances  have  been  continuous, 
rapid,  and  beneficial,  and  the  question  naturally  arises, 
Has  there  been  corresponding  improvement  in  the  con- 
dition and  character  of  the  people,  in  the  public  morals, 
in  the  tone  of  what  is  called  society  ?  These  questions 
must  be  answered  in  the  negative.  And  how  is  it  with 
the  great  political  experiment  which  is  being  tried  in 
the  United  States?  The  world's  history  has  lead  to  the 
conclusion  that  men  are  incapable  of  self-government  on 
a  large  scale.  All  the  ancient  republics  and  all  the  mod- 
ern, except  Switzerland,  have  been  substantially  failures. 
Is  there  good  ground  for  the  expectation  that  in  our  case 
history  wnll  not  repeat  itself?  Are  our  political  leaders 
more  devoted  to  the  public  service,  less  selfish  in  their 
aims,  than  were  their  predecessors?  Is  politics  more 
honorable  than  it  used  to  be  ?  Are  our  elections  more 
honorably  conducted  than  they  were  in  the  early  days 
of  the  Republic  ?  Everybody  knows  how  these  questions 
must  be  answered.     In  the  contests  between  the  Feder- 


11 

alists  and  Democrats  there  was  as  much  excitement  and 
more  bitterness  than  are  now  witnessed  in  Congressional 
and  Presidential  elections,  but  the  contests  then  were 
for  principles,  not  for  spoils.  Men  were  Federalists  be- 
cause they  believed  that  strong  central  power  was  neces- 
sary for  the  preservation  of  law  and  order,  or  Democrats 
because  they  were  opposed  to  centralization  that  had  in 
it  the  savor  of  anarchy.  Then  the  use  of  money  (the 
most  debasing  of  all  influences)  in  elections  was  unknown. 
Now  the  free  use  of  it  seems  to  have  become  a  necessity, 
and  it  is  largely  relied  upon  as  a  controlling  agency  in 
close  political  contests.  Then  the  native-born  Americans 
controlled  the  State  and  city  elections.  Now  the  foreign- 
born,  mainh'  of  the  lower  classes,  man}-  of  whom  are 
revolutionists,  hold  the  balance  of  power  in  all  our  large 
cities,  and  in  some  States.  So  great,  in  the  wrong  di- 
rection, have  been  the  changes,  that  I  should  despair  of 
the  Republic  if  I  had  not  been  an  observer  of  the  over- 
throw of  Twxed  and  his  associates  in  New  York,  and  of 
the  self-preserving  power  of  the  Government  in  the  late 
civil  war.  I  am  hopeful  that  the  Republic  will  not  be  a 
failure,  notwithstanding  the  powerful  influences  which 
are  at  work  against  it,  because  good  seed  was  sowm  here, 
and  I  believe  that  it  took  too  deep  root  to  be  eradicated. 
I  believe  that  there  exists,  and  will  continue  to  exist,  a 
self-preserving  power  among  the  intelligent  and  liberty- 
loving  people  that  will  manifest  itself  when  danger  be- 
comes imminent. 

One  thing  is  as  certain  as  anything  in  the  future  can 
be:  if  republicanism  should  be  a  failure  in  the  United 
States,  the  question  of  the  power  of  the  people  to  estab- 
lish and  sustain  a  Government  "by  themselves  and  for 
themselves"  will  be  settled  adversely  and  forever. 

HUGH  Mcculloch. 

September,  1890. 


ADDRESS 


DELIVERED  AT 


FORT   WAYNE,  IND.,  JULY   4,  1861. 


ADDRESS 

DELIVERED  AT 

FORT   WAYNE,  IND.,  JULY   4,  1861 


Fellow-Citizens:  We  meet  to  celebrate  the  anni- 
versar}'  of  our  national  independence  under  peculiar 
circumstances.  The  present  condition  of  our  country  is 
a  matter  of  deep  and  solemn  interest  to  ever}-  citizen  of 
the  United  States.  Our  Government  is  now  undergoing 
a  trial  to  which  we  had  fondly  hoped  it  would  never  be 
exposed.  That  which  gives  security  to  life,  value  and 
protection  to  property,  is  in  danger.  Questions  of 
momentous  interest  to  all  of  us  are  now  in  process  of 
settlement,  not  through  the  instrumentalities  provided 
by  the  Constitution,  but  by  the  terrible  arbitrament  of 
the  sword.  W^e  are  in  the  midst  of  an  attempted  revo- 
lution, the  result  of  which  may  not  only  seriously  affect 
the  vital  interests  of  the  people  of  the  United  States, 
but  the  welfare  of  the  race. 

While,  therefore,  we  cherish  a  stronger  love  for  the 
Union  than  ever,  we  meet  not  to-day  to  glorify  it,  for  it 
is  attacked  by  formidable  forces;  not  to  eulogize  our 
free  institutions,  for  their  strength  and  stability  are  now 
being  subjected  to  a  severe  if  not  a  decisive  test.  We 
meet  not  in  that  spirit  of  pride  and  complacency  which 
has  usually  characterized  our  Fourth  of  July  celebra- 
tions— to  boast  of  our  capacity  for  self-government  and 
of  the  glory  of  the  great  Republic — for  madness  has 
seized  upon  a  large  portion  of  our  people,  which,  if  not 
arrested,  will  demonstrate  the  idleness  of  our  preten- 
sions, and  lay  the  noblest  fabric  of  human  wisdom  and 
patriotism  in  ruins. 

On  our  last  national  anniversary  a  goodly  number  of 


16 


the  old  settlers  of  this  vicinit}-  met  at  Fort  Wayne  to 
contrast  the  past  with  the  present;  to  congratulate  each 
other  that  "  our  lines  had  fallen  in  such  pleasant  places;" 
that  we  were  in  the  possession  of  so  rich  a  political  in- 
heritance, upon  the  glory  of  our  common  country.  The 
occasion  was  one  of  more  than  local  interest.  In 
reviewing  the  history  and  rapid  development  of  north- 
ern Indiana,  our  thoughts  naturally  recurred  to  our 
national  growth  and  prosperity.  Our  minds  ran  back 
over  the  intervening  two  hundred  and  fifty  years,  since 
the  first  permanent  settlements  were  made  upon  the 
North  American  continent,  to  the  establishment  of  gov- 
ernments in  the  forests  of  New  England  and  Virginia, 
the  slow  but  steady  growth  of  the  colonies,  the  glories 
of  the  Revolution  and  the  birth  of  our  present  noble 
Constitution.  Our  hearts  kindled  within  us  as  we  dwelt 
upon  the  gallantry  and  indomitable  energy  of  our  fore- 
fathers in  the  dark  days  when  our  independence  was 
achieved,  and  our  admiration  was  excited  as  we  reflected 
upon  the  wisdom  that  laid  the  foundations — too  deep,  as 
we  supposed,  to  be  ever  seriously  disturbed — of  our 
State  and  National  governments,  and  we  exulted  as  we 
traced  the  onward  career  of  our  country  in  prosperity, 
population  and  renown. 

The  United  States  had  become  almost  in  infancy  the 
commanding  figure  in  the  great  picture  of  nations. 
Without  a  competitor  in  the  New  World,  free  from  the 
influences,  and  fearless  of  the  power  of  European  States, 
the  object  of  admiration  at  home,  and  the  hope  of  free- 
men everywhere,  it  held  the  proudest  position  ever  oc- 
cupied by  any  nation  in  the  world's  great  history.  Re- 
covering from  the  commercial  and  financial  disasters  of 
1857,  we  seemed  to  be  starting  on  a  career  of  unequaled 
enterprise  and  prosperity.  Ever}^  department  of  in- 
dustry was  stimulated  into  activity.  Our  growing  crops 
had  been  of  wonderful  promise,  and  the  harvest  was 
more  magnificent  even  than  the  promise.  Our  com- 
merce was  whitening  every  ocean  and  sea  under  heaven. 
The  balance  of  trade,  which  for  so  many  years  had  been 
in  favor  of  Europe,  was  turning  in  our  favor  and  making 
us  the  creditor  country  of  the  world.  Emigrants  from 
the  Old  W^orld   continued   to  crowd   upon  our  shores,  to 


17 


join  the  advancing  column  of  native-born  citizens  m 
pushing  our  frontier  settlements  to  the  Pacific  Ocean, 
and  the  time  seemed  not  far  distant  when  b}^  means  of 
a  railroad  to  that  ocean  we  should  stretch  out  our  hands 
unto  Asia,  and  while  we  secured  the  advantages  of  a 
direct  trade  with  that  populous  quarter  of  the  globe,  we 
should  revive  its  decaying  energies  by  an  infusion  into 
its  system  of  Americanized  Anglo-Saxon  forces. 

Since  the  race  was  planted  in  Eden,  no  nation  had 
ever  been  so  favored  and  prosperous  as  ours.  Our  Gov- 
ernment was  only  felt  by  its  benefits,  and  not,  as  is  the 
case  with  most  others,  by  its  oppressions  and  its  exac- 
tions. Just  and  equal  in  its  laws,  all  sections  were 
equally  prospering  under  its  gentle  rule.  The  North 
and  the  South,  with  different  domestic  institutions  and 
a  consequent  dissimilar  civilization,  seemed  onl}^  gen- 
erous rivals  in  a  common  prosperity,  and  bound  as  loyal 
States  in  a  common  destiny  by  the  strongest  commercial, 
social,  and  political  ties.  We  were  approaching  the 
period  when  new  agents  were  to  be  selected  by  the  peo- 
ple to  administer  the  Government  at  Washington,  and 
the  canvass  then  in  progress  had  developed  less  than 
usual  of  party  bitterness  and  strife.  Four  candidates 
were  in  the  field  for  the  distinguished  position  of  Presi- 
dent of  the  Republic,  but  the  friends  of  each  seemed 
emulous  of  the  honor  of  entertaining  the  strongest  love 
and  indicating  the  heartiest  attachment  to  the  Union 
and  the  Constitution. 

It  was  true  that  the  discussions  of  the  slavery  question 
— that  old  apple  of  discord — had  excited  some  bad  blood 
between  the  sections,  and  that  threats  were  made  bj- 
politicians  in  the  South,  that  the  success  of  the  party 
now  in  power  would  be  considered  in  that  quarter  a 
sufficient  cause  for  the  dissolution  of  the  Union,  but  no 
serious  apprehensions  were  extensively  entertained  that 
any  State  would  seriously  attempt  to  put  such  threats 
into  execution.  As  the  people  of  the  North,  with 
trifling  exceptions,  cherished  no  other  than  the  most 
friendly  sentiments  for  their  Southern  brethren,  waged 
no  war  upon  their  rights  under  the  Constitution,  which 
of  itself  afforded  the  most  perfect  security  for  those 
rights,  and   regarded   the  Union  as  being  of  priceless 


18 


value  to  all  sections,  they  did  not  and  could  not  believe 
that  any  considerable  number  of  citizens  of  the  United 
States  would  be  desperate  enough  to  undertake  to  rup- 
ture the  ties  that  made  us  a  nation. 

One  year  ago  the  Union  seemed  as  safe  and  as  per- 
manent as  at  any  time  since  the  Constitution  was  adopted. 
At  no  former  period  had  its  glory  been  brighter  or  its 
prospects  as  a  nation  more  flattering.  B}^  all  civilized 
nations  the  United  States  were  regarded  and  recognized 
as  a  great  and  growing  power.  Our  stars  and  stripes, 
idolized  at  home,  were  honored  and  respected  by  those 
who  dreaded  the  principles  they  represented,  while  the 
oppressed  of  all  lands  looked  to  them  as  the  symbol  of 
liberty  and  the  sign  of  promise.  To  claim  the  protec- 
tion of  that  flag  was  the  right  of  every  citizen,  native 
or  adopted,  wherever  he  might  be,  and  like  the  appeal 
of  olden  time,  "  I  am  a  Roman  citizen,"  it  was  a  suffi- 
cient guarantee  of  safety. 

But  now  how  different  the  scene.  The  same  bright 
sun  is  over  our  heads,  the  same  glad  earth  beneath  our 
feet;  our  Constitution  is  unchanged;  the  elements  of 
national  and  individual  prosperity  are  as  abundant  as 
ever;  no  alteration  affecting  injuriously  the  rights  of  in- 
dividuals or  of  States  has  been  made  upon  the  statute 
book  of  the  nation;  no  foreign  enemy  threatens  our 
domain;  no  providential  calamity  has  befallen  us;  and 
yet  we  find  business  at  a  stand,  the  prices  of  our  pro- 
ducts declining,  manufacturing  suspended,  our  shipping 
at  the  wharves,  bankruptcy  among  our  merchants,  the 
prosperity  of  many  of  our  cities  literally  dried  up,  the 
songs  of  peace  and  the  hum  of  industry  exchanged  for 
the  music  of  the  fife  and  drum,  the  country  converted 
into  a  camp  and  bristling  with  arms.  Brothers  of  the 
same  blood,  descendants  of  those  who  established  the 
unity  of  the  Government,  are  now  arrayed  against  each 
others  to  decide,  perhaps,  the  destiny  of  the  nation  at 
the  cannon's  mouth.  The  State  that  gave  birth  to  Wash- 
ington has  become  a  battlefield,  and  the  repose  of  his 
grave  is  disturbed  by  the  marching  of  troops  and  the 
battle-cry  of  opposing  hosts. 

Alas  for  the  stability  of  human  institutions,  when  the 
beneficent  Government  of  the  United  States  is  in  danger 


19 


from  its  own  people.  Alas  for  the  wisdom  and  patriot- 
ism of  man,  when  intelligent  American  citizens  can  plot 
and  fi'ght  to  overthrow  the  fairest,  noblest,  and  most  be- 
nignant political  institutions  that  were  ever  vouchsafed 
to  the  race. 

But,  fellow-citizens,  the  evil  is  upon  us,  and  we  must 
meet  it  like  men.  The  Government  is  attacked  by  those 
who  have,  until  recently,  controlled  its  policy,  but  it 
must  not  be  overthrown.  The  property  of  the  nation 
has  been  plundered  and  its  glorious  flag  trailed  in  the 
dust  by  those  who  have  resolved  to  ruin  when  they  can 
no  longer  rule ;  but  as  certainly  as  the  bolt  shatters  what 
it  strikes,  so  certainly  will  the  vengeance  of  awakened 
and  indignant  patriotism,  North  and  South,  strike  to  the 
earth  the  authors  of  this  unnatural  and  accursed  rebel- 
lion. 

"The  Union,  it  must  and  shall  be  preserved,"  caught 
from  the  lips  of  Andrew  Jackson,  is  now  the  rallying  cry 
of  millions  of  freemen;  "Liberty  and  Union  now  and 
forever,  one  and  inseparable,"  the  language  of  the  great 
expounder  of  the  Constitution;  "  If  any  man  attempts  to 
tear  down  that  flag,  shoot  him  on  the  spot,"  the  prompt 
command  of  the  brave  and  able  Dix;  "Why  do  we 
stand  still  ?  Let  the  column  move  on,"  the  dying  words 
of  the  noble  Douglas,  now  indicate  the  sentiment  and 
spirit  of  a  united  North. 

Thank  God  that  we  are  at  last  a  united  North;  that 
when  the  Government  is  in  danger,  party  spirit  is  hushed 
and  party  distinction  forgotten;  that  when  the  banner 
of  the  nation  is  attempted  to  be  dishonored,  the  Democ- 
racy do  not  stand  back  because  one  of  their  own  party 
is  not  its  chief  standard-bearer,  but  gallantly  step  for- 
ward to  uphold  it. 

All  honor  to  those  who,  in  conquering  their  prejudices, 
have  put  to  a  practical  test  their  loyalty  and  patriotism. 
Everlasting  honor  to  him.  the  noble  Illinoisian,  who, 
while  smarting  under  a  defeat,  hesitated  not  for  a  moment 
in  his  support  of  the  administration  of  the  man  whose 
election  he  had  opposed,  but  who,  before  the  canonad- 
ing  of  Sumter  had  died  upon  the  breeze,  pledged  him- 
self, soul  and  body,  to  the  defense  of  the  nation  and  its 
flag.     Cut  down  in  the  meridian  of  life,  with  the  most 


20 


brilliant  prospects  before  him,  mourned  b}-  a  nation,  he 
sleeps  the  sleep  of  death,  but  his  words  still  ring  in  our 
ears,  "  Wh}^  do  we  hesitate?  Let  the  cohtmn  move  011^ 
Yes,  gallant  and  indomitable  spirit,  the  column  will 
move  on.  From  hill  and  valley  and  plain,  from  city  and 
town  and  hamlet,  the  friends  of  the  Union  and  of  the 
Constitution  are  hastening  to  the  rescue. 

•'  Trumpets  are  sounding,  war  steeds  are  bounding, 
Treason  for  many  a  da^'  shall  talk  of  the  bloody  fray, 
"When  the  hosts  of  the  North  passed  over  the  border." 

Never  has  the  world  beheld  such  a  general,  generous 
uprising  of  a  people  in  the  defense  of  their  Government 
as  we  witness  to-day.  From  the  Lakes  to  the  Ohio, 
from  the  Western  deserts  to  the  Atlantic,  men  are  rush- 
ing to  arms,  not  to  subjugate,  but  to  save;  not  to  over- 
throw the  Constitution,  but  to  restore  its  wonted  and 
healthy  action.  No  conscription  is  needed,  no  impress- 
ments are  required.  Thousands  of  willing  hearts  are 
waiting  only  for  the  welcome  words  that  their  services 
will  be  accepted.  Our  gallant  Hoosier  State  furnishes 
twenty  regiments  and  would  furnish  forty  more  if  they 
were  needed  by  the  Government. 

The  lo3'alty  of  Indiana  in  the  present  emergenc}'  is  of 
the  most  significant  character.  Indiana  is  a  conserva- 
tive State.  The  anti-slavery  sentiment  has  never  taken 
deep  root  in  her  soil.  From  the  National  Road  to  the 
Ohio  her  trade  has  been  chiefly  with  the  South,  and  a 
large  portion  of  the  population  of  this  section  is  made 
up  of  immigrants  from  the  Southern  States.  Their  so- 
cial sympathies  and  their  pecuniary  interests  bind  them 
to  that  quarter.  There  lie  the  bones  of  their  fathers, 
and  there  still  live  many  of  their  relatives  and  friends; 
and  3'et  in  southern  Indiana,  where,  if  an^'where,  we 
should  expect  lukewarmness  toward  the  Government,  if 
not  an  active  co-operation  with  the  Confederate  States, 
we  find  the  strongest  Union  sentiments  prevailing.  The 
Union,  it  must  not  be  dismembered;  the  Constitution, 
it  mu.st  not  be  destroyed;  the  Mississippi,  its  mouth  must 
never  be  owned  by  a  foreign  power,  is  the  language  of 
the  people  of  southern  Indiana,  and  they  will  not 
change  it,  whatever  it  may  cost  to  make  good  their  reso- 
lution. 


21 

The  subject  of  government,  fellow-citizens,  is  one  of 
the  most  important  subjects  that  have  ever  engaged  the 
attention  of  men.  It  is  the  first  question  that  presents 
itself  for  consideration  in  the  organization  of  society; 
it  is,  in  fact,  the  basis  of  societ3^  Without  a  govern- 
ment there  would  be  no  protection  for  life,  no  ownership 
of  property,  no  laws  to  preserve  rights  nor  punish  wrongs; 
and  it  is  an  interesting  fact  that  the  nature  and  character 
of  their  government  indicate  the  condition  and  disposi- 
tion of  a  people.  If  a  government  be  despotic,  arbi- 
trary, and  oppressive,  the  people  will  generally  be  found 
to  be  slavish,  inefficient,  and  degraded;  if  it  be  free 
and  liberal  and  just,  the  people  will  be  intelligent,  en- 
terprising, and  spirited.  This  results  from  the  fact  that 
a  people  will  have,  with  rare  exceptions,  such  kind  of 
government  as  they  are  fitted  and  qualified  to  sustain. 
A  republican  form  of  government  was  adopted  by  the 
people  of  the  United  States,  because  it  was  the  best  form 
of  government  and  because  the  circumstances  in  which 
they  were  placed  fitted  them  for  that  experiment.  The 
Puritans  of  New  England  and  the  Cavaliers  of  Virginia 
did  not  immigrate  to  America  to  establish  republican 
institutions.  They  were  loyalists  and  monarchists,  and 
so  were  their  descendants  up  to  the  time  of  the  Revo- 
lution. The  American  colonies  were  loyal  to  England 
until  after  the  first  battles  of  the  Revolution  were  fought. 
They  did  not  secede  from  England,  after  the  fashion  of 
the  Confederate  States.  They  did  not,  while  under  al- 
legiance to  Great  Britain,  plot  treason  against  her  Gov- 
ernment and  plunder  herproperty.  When  their  just  rights 
had  for  a  long  time  been  denied  them,  when  their  peti- 
tions for  redress  had  been  repeatedly  rejected,  and  their 
messengers  had  been  "spurned  with  contempt  from  the 
foot  of  the  throne,"  and  the  blood  of  their  people  had 
been  shed  at  Lexington  and  Bunker  Hill,  then,  and  not 
till  then,  did  they,  through  their  chosen  representatives, 
proclaim  their  independence  by  the  immortal  document 
we  have  just  now  heard  read,  and  proceed  to  establish 
a  government  for  themselves. 

In  throwing  off  their  allegiance  to  the  Mother  Coun- 
try and  committing  themselves  to  a  war  with  the  most 
powerful  nation  upon  earth,  they   put    their  lives  and 


22 


fortunes,  if  not  their  sacred  honor,  in  imminent  peril; 
but  they  had  counted  the  cost,  they  defied  the  danger, 
and  with  a  bravery  and  constanc}'  that  have  never  been 
surpassed  they  fought,  under  the  most  discouraging  cir- 
cumstances, the  battles  of  the  Revolution  until  their 
success  was  made  certain  by  the  decisive  triumph  at 
York  town. 

Their  independence  was  achieved  and  in  due  time 
acknowledged  by  Great  Britain,  but  their  resources 
were  exhausted  by  the  severe  and  protracted  conflict. 
They  were  without  a  nav^^  or  commerce,  or  manufac- 
ture; with  a  heavy  debt,  an  empty  treasury,  and  a  cir- 
culation of  Continental  notes  in  the  hands  of  the  people 
and  the  soldiers  that  were  not  worth  the  paper  on  which 
they  were  printed;  and  worse  than  all,  the  government 
they  had  formed  was  without  unity  and  strength.  No 
sooner  was  the  war  ended  than  jealousies  were  engen- 
dered among  the  colonies.  Each  of  the  colonies  was  a 
petty  sovereign,  without  any  controlling  bond  of  union 
between  them.  I  apprehend  that  few  people  were  ever 
in  a  less  prosperous  and  hopeful  condition  than  were  the 
American  colonies  at  the  close  of  the  Revolutionary 
war.  Washington  and  his  associates  soon  discovered 
that  the  league  which  they  had  formed  was  not  the  gov- 
ernment they  needed.  A  central  power  was  necessary, 
to  limit  and  control  the  action  of  the  colonies,  to  coin 
money,  collect  duties,  regulate  commerce,  establish 
courts,  and  provide  armies  and  a  navy  for  the  common 
defense.  They  w^anted,  in  a  word,  a  general  govern- 
ment, whose  power  in  its  appropriate  sphere  should  be 
superior  to  that  of  the  colonies,  and  absolute  in  its  char- 
acter. Out  of  this  want  grew  our  present  Constitution,  the 
most  perfect  charter  ever  formed  by  human  wisdom  and 
patriotism.  Upon  its  adoption  we  became  a  nation,  and 
took  our  place  among  the  nations  of  the  earth.  So  wise 
were  its  provisions,  so  clearly  did  it  define  the  duties 
and  powers  of  the  Government,  so  absolute  were  those 
powers  while  they  infringed  not  upon  the  reserved  and 
necessary  rights  of  the  States,  and  so  admirably  was  it 
adapted  to  the  wants  and  genius  of  the  people,  that  the 
effect  of  its  adoption  was  almost  miraculous.  Commerce 
at  once  revived,  credit   was    restored,  enterprise    was 


23 

quickened.  Then  we  became  the  United  States  of  Amer- 
ica, and  from  that  time  onward  our  march  to  greatness 
was  with  the  majestic  tread  of  a  giant.  From  three 
millions  of  people,  in  three-quarters  of  a  century  we 
have  increased  to  thirty  millions.  From  thirteen  feeble 
colonies  scattered  along  the  seaboard,  we  have  become 
a  great  nation,  disdaining  all  boundaries  but  the  oceans, 
covering  the  seas  with  our  ships,  supplying  distant  lands 
with  our  agricultural  productions  and  our  manufactures, 
and  instructing  them  in  the  lessons  of  liberty  by  our 
successful  experiment  of  self-government. 

Just  at  this  period  of  our  history,  when  the  past  was 
a  success  and  the  future  full  of  promise,  while  all  sec- 
tions of  our  common  country  were  in  the  highest  degree 
prosperous,    and   all   their  rights  were   secured  by   the 
Constitution,  politicians  at   the    South,   availing   them- 
selves of  the  success  of  a  party  which  they  considered 
hostile  to  slavery  or  opposed  to   its  extension,  and  con- 
fidentlv    expecting    aid    and    comfort   from  the   North, 
undertook   to  carry   out  their  designs,  for  a  long  time 
entertained,  of  breaking  up  the  Government  by  a  seces- 
sion of  the  Southern  States.     At  the   very   time  when 
another  people    (the  Italians)  w^ere  struggling  through 
"blood  and  slaughter"   to  bring  into  a  united  Govern- 
ment States  that  had  been  long  separated,  to  quiet  the 
rivalries  and  jealousies  and  wars  that  their  separation 
had  produced,  politicians  and  traitors  deliberately  under- 
took, for  reasons  that  will  not  bear  a  moment's  scrutiny, 
to  break  up  this  Union  and  introduce  into   the  United 
States  the  revolutions,  the  insecurity,  the  anarchy  and 
bloodshed  that  have  marked   the  history  of   the  Italian 
States  and  the  Mexican  and  South  American  Republics. 
Of   all    the    doctrines    that    ever    emanated  from  the 
prince  of  evil  the  doctrine  of  peaceable  secession  from 
the  Union  of   any  of  the  States  that  compose  it  is  the 
most  dangerous  and  the  most  diabolical.     Senator  John- 
son, of  Tennessee,  the  fearless  champion  of  the  Union, 
well  denominates  it  "  hell  found  and  hell  bound."     Its 
pretentions  are  so  monstrous,  and  its  results  if  carried 
into  practice  would  be  so  deplorable  and  so  ruinous,  that 
its  paternitv  mav  with    propriety  be  attributed   to  the 
fallen   archangel'.     Nullification  was  bad    enough,  dis- 


24 


obedience  to  a  constitutional  law  of  Congress  by  one  of 
the  States  of  the  Union  was  dangerous  enough;  but  the 
doctrine  that  a  State,  itself  "being  the  judge  of  the  pro- 
vocation, may  peaceably  secede  from  the  other  States 
without  a  change  of  the  Constitution,  and  even  without 
the  consent  of  its  co-partners — if,  according  to  the  South- 
ern notion,  our  Confederation  is  nothing  but  a  co-partner- 
ship— at  the  same  time  taking  violent  possession  of  the 
common  property  that  happens  to  be  within  its  reach, 
is  a  sublimity  of  audacity  at  which  the  great  nuUifier 
himself  would  have  stood  aghast. 

Fellow-citixens,  ours  is  a  Government,  a  Government 
of  the  people,  created  by  the  people  as  a  political  neces- 
sity, because  the  old  Confederation  lacked  the  proper 
and  indispensable  elements  of  a  government,  unity,  and 
strength.  The  Constitution  was  adopted  to  form  a  more 
perfect  Union.  If  the  Southern  doctrine  be  true,  it 
formed  a  less  perfect  one.  It  is  not  a  league  or  a  co- 
partnership. There  is  no  Government  on  earth  whose 
rights,  duties,  and  obligations  are  so  clearly  defined  as 
that  of  the  United  States.  A  State  can  no  more  with- 
draw the  allegiance  of  its  people  from  the  Government 
than  the  Government  can  fail  to  perform  the  duties  that 
devolve  upon  it  by  the  Constitution.  The  obligations  of 
the  Government  are  to  the  people  of  the  country,  and 
their  allegiance  is  primarily  due  to  the  Government; 
and  every  citizen,  no  matter  what  may  be  the  action  of 
his  State,  who  wages  war  against  it,  is  a  traitor,  and 
should  receive  a  traitor's  doom.  States  did  not  create 
the  Government;  so  far  from  it,  they  were  made  States 
by  the  formation  of  the  Government,  and  they  have  no 
power  whatever  to  annul  the  allegiance  of  their  citizens 
to  the  Government. 

There  are  two  ways  b}-  which  States  can  withdraw 
from  the  Union.  One  is  by  a  change  of  the  Constitu- 
tion, according  to  its  own  provisions;  the  other,  by  suc- 
cessful revolution.  Secession  is  revolution,  and  it  is 
idle  to  call  it  anything  else.  It  is  rebellion  against  the 
Government,  and  if  the  Government  had  failed  to  take 
the  necessary  steps  to  suppress  it,  it  would  not  have 
been  regarded  and  recognized  as  a  nation  at  home  or 
abroad.     It  does  not  foUowthat  its  inability  to  suppress 


25 


the  rebellion  in  the  Southern  States  would  be  the  de- 
struction of  the  Government;  on  the  contrary,  it  may 
be  strengthened  in  its  nationality  by  an  successful 
effort  to  subdue  it.  England  did  not  suffer  in  its  nation- 
ality by  the  loss  of  its  American  colonies;  but  if,  through 
fear  of  insufficiency,  she  had  permitted  them  peaceably 
to  secede,  what  would  have  been  her  position  among 
other  nations,  and  how  many  of  her  other  colonies  would 
she  have  retained  ?  Austria  did  not  cease  to  be  a  nation 
when  the  Italian  States  succeeded,  by  force  of  arms,  in 
severing  themselves  from  the  empire;  but  if  they  had 
been  permitted  peaceably  to  resume  their  independence, 
how  strong  would  have  been  her  hold  upon  Hungary  ? 
This  fact  will  at  least  be  established  by  the  present  war. 
States  that  attempt  to  go  out  of  the  Union  will  have  to 
fight  their  way  out.  I  apprehend  that  the  result  of  this 
present  secession  movement  will  be  such  as  will  satisfy 
the  people  of  all  the  States  that  secession  means  war, 
and  can  only  be  accomplished  by  the  exercise  of  power 
superior  to  that  of  the  Government.  If  South  Carolina 
had  been  given  to  understand,  as  .she  would  have  been 
advised  if  Andrew  Jackson  had  been  President,  that  she 
could  only  leave  the  Union  by  a  successful  trial  of  arms 
with  the  Government,  she  would  have  hesitated  long  be- 
fore she  made  the  fatal  plunge. 

No,  fellow- citizens,  peaceable  secession  is  an  imprac- 
ticability, a  monstrous  heresy  and  delusion.  Secession 
is  revolution,  and  the  seceded  States  are  now  in  open  re- 
volt against  the  Union.  The  leaders  in  this  rebellion 
did  not  seek  by  proper  means  a  change  of  the  Constitu- 
tion by  which  their  property  might  be  made  more  se- 
cure, for  that  property  was  as  secure  as  constitutions  and 
laws  could  make  it;  or  by  which  their  rights  might  be 
made  safe,  for  no  right  of  theirs  had  ever  been  inter- 
fered with  by  the  Government;  or  by  which  they  might 
be  separated  from  the  Northern  States,  for  they'did  not 
dare  to  trust  their  own  people  with  the  decision  of  this 
question.  They  determined  to  strike  a  blow  at  the 
Union  itself,  and  by  precipitating  hostilities,  by  an  at^ 
tack  upon  the  property  and  forces  of  the  Government,  to 
commit  themselves  and  their  associates  to  such  acts  of 
treason  as  would  render  a  successful  revolution  an  indis^ 


26 

pensable  necessity.  They  trusted,  doubtless,  that  the 
revolution  would  be  a  comparatively  eas}-  and  bloodless 
one,  because  they  regarded  the  administration  as  ineffi- 
cient, and  believed  if  Mr.  Buchanan  should  attempt  to 
do  his  duty  that  he  would  be  held  in  check  by  their 
friends  in  his  Cabinet  and  in  Congress  and  a  strong  party 
of  sympathizers  in  the  Northern  States.  Even  now, 
with  unparalleled  impudence  and  effrontery,  they  ask 
only  to  be  let  alone.  They  say  they  seek  not  war,  but 
peace,  after  they  have  plundered  mints,  captured  forts, 
and  treated  with  atrocious  barbarity  and  driven  from 
their  property  and  their  homes  thousands  of  Union  men, 
who  were  charged  with  no  crime  but  that  of  loving  their 
countr}^  and  honoring  its  flag,  and  have  marshalled  their 
forces  with  the  avowed  purpose  of  attacking  the  Federal 
Capitol. 

I  claim  to  be  a  conservative  man.  I  have  entertained 
no  prejudice  against  the  people  of  the  Southern  States, 
and  had  no  di.sposition  to  wage  war  upon  or  interfere 
with  their  domestic  institutions.  On  the  contrary,  I 
have  ever  been  disposed  to  yield  something  of  sentiment 
and  principle  for  the  sake  of  conciliation,  and  to  give  to 
slavery  rights  and  privileges  that  the  Constitution  never 
contemplated.  I  feel,  therefore,  that  I  can  express  an 
impartial  judgment  upon  the  political  events  that  have 
recently  transpired, and  a^e  now  transpiring,  in  the  South- 
ern States,  and  have  no  hesitation  in  saying  that  the 
treason  of  the  Southern  members  of  Mr.  Buchanan's 
Cabinet,  and  most  of  the  Southern  Senators  and  mem- 
bers of  Congress,  in  deliberately  plotting  the  overthrow 
of  the  Government  which  they  were  under  the  most 
solemn  oath  to  support,  was  of  unparalleled  atrocity; 
and  that  the  attempt  of  the  Confederates  to  destroy  the 
Union  by  which  the  South,  in  common  with  the  North, 
had  been  so  greatly  prospered,  is  an  act  of  madness  of 
which  history  affords  no  example. 

For  their  treason  no  apology  can  be  offered;  to  justify 
the  revolution  they  have  commenced,  they  must  plead  be- 
fore that  great  tribunal,  the  public  sentiment  of  the  world. 

Let  us  look  for  a  moment  at  their  pleas  : 

I.  They  charge  that  the  Government  had  failed  to 
accomplish  the  object  for  which  it  was  created. 


27 

What  says  the  preamble  of  the  Constitution?  "We, 
the  people" — mark  the  language— "we,  the  people  of 
the  United  States,  in  order  to  form  a  more  perfect  Union, 
establish  justice,  insure  domestic  tranquility,  provide 
for  the  common  defense,  promote  the  general  welfare, 
and  secure  the  blessings  of  liberty  to  ourselves  and  to 
our  posterity,  do  ordain  and  establish  this  Constitution 
for  the  United  States  of  America." 

Now,  in  which  of  these  particulars  has  the  Government 
failed  of  its  object?  Did  it  not  form  a  more  perfect  Union, 
and  if  that  Union  is  not  perfect  to-day,  is  it  not  owing  to 
the  treason  and  violence  of  those  who  complain  of  its 
failure?  Has  it  not  insured  domestic  tranquility,  except 
so  far  as  that  tranquility  has  been  disturbed  by  those  who 
now  assail  it?  Has  it  not  established  justice,  provided 
for  the  public  defense,  promoted  the  general  welfare, 
and  secured  the  blessings  of  liberty  to  our  fathers  and 
to  us?  In  no  single  particular  has  it  proved  a  failure. 
It  has,  in  its  practical  workings,  proved  more  beneficial 
than  its  most  friends  and  advocates  ever  anticipated.  It 
made  and  has  continued  us  a  nation,  honored  and  re- 
spected throughout  the  world,  and  covered  the  land  with 
unexampled  prosperity. 

2.  It  is  charged  that  the  policy  of  the  Government  has 
been  inconsistent  with  the  interests  of  the  South. 

To  this  it  is  answered  that  the  South  has  mainly  con- 
trolled this  poUcy;  that  there  is  not  now,  and  never  has 
been,  upon  the  statute  book  of  the  nation  a  single  law  that 
could  have  been  placed  there  without  the  aid  of  Southern 
votes;  that  the  first  protective  tariff  bill  was  introduced  by 
a  distinguished  Southerner,  and  passed  Congress  against 
the  opposition  of  Northern  members,  and  that  no  impor- 
tant legislation  has  been  consummated  at  Washington 
without  the  sanction  of  the  representatives  of  Southern 
States.  Nay,  further,  aside  from  foreign  immigration, 
which  naturally  avoided  the  States  in  which  labor  is  dis- 
reputable, the  Southern  States  have  increased  in  popu- 
lation as  rapidly  as  the  Northern,  while  her  orators  and 
statesmen  have  claimed  a  more  rapid  development  of 
resources  and  increase  of  wealth,  together  with  a  higher 
civilization,  than  were  witnessed  in  the  Northern  States. 
I  defy  any  man  to  show  that  the  North  has  been  oppres- 


28 

siye  to  the  South,  checked  her  expansion,  or  laid  the 
slightest  unequal  burdens  upon  her  enterprise  or  her 
industry. 

3.  The  North  has  become  abolitionixed  and  onlv  waited 
the  proper  opportunity  to  overthrow  the  institution  of 
slavery. 

To  this  I  say,  that  while  the  public  sentiment  of  the 
Northern  States  has  been  unfavorable  to  slavery,  there 
has  been  no  disposition  among  the  people  generally  to 
interfere  with  it  in  the  States,  while  a  large  minority 
have  been  willing  to  give  to  it  equal  privileges  in  the 
Territories.  In  every  contest  between  the  sections  upon 
the  subject  of  slavery  the  South  has  been  the  victor. 
The  history  of  the  admission  of  Missouri,  the  compro- 
mise bills,  and  the  repeal  of  the  Missouri  compromise 
fully  establish  this  fact.  The  very  day  on  which 
South  Carolina  resolved  herself  out  of  the  Union,  the 
rights  of  the  South  were  more  fully  secured  by  acts  of 
Congress  and  the  decisions  of  the  courts  than  they  had 
ever  been  since  the  Constitution  was  adopted;  and",  fur- 
ther, after  the  secession  movement  had  commenced  and 
a  good  portion  of  the  Southern  Senators  had  resigned, 
Congress,  by  a  two-thirds  vote,  adopted  an  amendment 
to  the  Constitution  declaring  that  Congress  should  never 
interfere  with  slavery  in  the  States,  and  that  this  amend- 
ment should  be  irrevocable;  and  the  Dred  Scott  decision 
gave  to  the  institution  ample  protection  in  the  Terri- 
tories. 

I  do  not  deny  that  there  has  been  too  much  acrimony 
and  bitterness  in  the  discussion  of  the  slavery  question 
among  a  portion  of  our  Northern  people,  but  there  has 
been  equal  acrimony  and  bitterness  in  its  discussion 
among  the  ultraists  of  the  South.  If  Northern  men' 
have  denounced  slavery  as  a  relic  of  barbarism,  a  re- 
proach upon  republicanism,  aggressive  and  dangerous, 
Southern  men  have  claimed  for  it  a  divinity  of  origin, 
a  benevolence  and  utility  which  the  world  at  large 
could  not  recognize.  If  Southern  institutions  have  been 
assailed  by  the  opponents  of  slavery,  Northern  labor 
and  Northern  institutions  have  been  assailed  with  equal 
violence  by  the  advocates  of  slavery.  Ultra  men  on 
both  sides  have  been  at  fault;  but  these  are  but  an  in^ 


29 


significant  fraction  of  the  people,  and  it  would  be  la- 
mentable indeed  if  the  most  vital  interests  of  the  many 
should  be  sacrificed  by  the  fanaticism  and  violence  of 
the  few. 

4.  The  election  of  Lincoln,  a  sectional  candidate,  was 
of  itself  an  evidence  of  the  deep-rooted  hostility  of  the 
North  to  slavery,  and  rendered  the  continuance  of  the 
vSouthern  States  in  the  I^nion  dishonorable  and  danger- 
ous to  them. 

But  the  election  of  Lincoln  would  not  probably  have 
occurred  but  for  the  course  of  the  ultraists  in  breaking 
up  the  Charleston  convention,  and  the  intelligence  of 
his  election  was  received  with  rapturous  delight  by  those 
who  pretended  to  regard  it  as  a  calamity.  Mr.  Douglas 
gave  it  as  his  opinion  that  the  same  game  would  have 
been  played  if  he  had  been  the  successful  candidate. 

Lincoln  was  elected  in  conformity  with  the  Constitu- 
tion. It  would,  at  all  events,  have  been  prudent,  not  to 
say  patriotic,  on  the  part  of  his  opponents  at  the  South 
if  they  had,*  as  they  pretended  to  have  a  reverence  for 
the  Constitution  and  a  regard  for  the  Union,  to  have 
awaited  the  developments  of  his  administration,  and  if 
any  demonstrations  were  made  by  him  or  his  party 
against  their  interests,  to  have  held  them  in  check  by 
their  majority  in  the  Senate  and  the  expressed  opinions 
of  the  Supreme  Court  before  taking  extreme  measures 
to  protect  those  interests  against  imaginary  dangers. 
This,  however,  did  not  suit  their  designs.  They  knew 
that  as  far  as  the  slavery  question  was  concerned,  the 
administration  of  Lincoln  would  closely  conform  to  that 
of  his  predecessors  and  to  the  letter  and  spirit  of  the 
Constitution,  and  that  this  would  contradict  their  pre- 
dictions and  defeat  their  plans.  They  knew  their  friends 
were  in  power,  and  that  with  Cobb  in  the  Treasury  and 
Floyd  and  Toucey  in  the  War  and  Naval  Departments, 
the  Treasury  could  be  plundered,  the  army  demoralized, 
and  the  navy  scattered  to  the  "  four  winds  of  heaven." 
They  struck  when  they  did  because  they  thought  the 
power  was  in  their  hands  and  that  it  was  dangerous  to 
delay. 

No,  fellow-citizens,  these  pleas  are  mere  pretexts  to 
justify  an  unholy  and  unnatural  rebellion.     Revolution- 


3d 


ists  at  the  South  long  ago  plotted  the  destruction  of  the 
Union.  A  proud  aristocrac}^  regarding  labor  as  a  dis- 
grace and  democracy  an  enemy,  they  have  for  years  in- 
dulged the  idle  dream  of  a  great  Southern  oligarch}-  of 
which  slavery  should  be  the  corner-stone,  a  free  trade 
with  Africa,  and  boundless  acquisition  of  Central  Amer- 
ican and  Mexican  territory;  but,  like  the  Turk  awaken- 
ing from  his  dream  of  glory  to  die  beneath  the  ponder- 
ous blows  of  Marco  Bozarris,  these  conspirators  and 
traitors  have  been  awakened  from  their  dreams  of  ag- 
grandizement b\-  the  battle-cry  of  a  united  and  indignant 
North  rallying  to  the  defense  of  the  Constitution  and 
the  Union. 

Fellow-citizens,  the  issue  has  been  forced  upon  the 
country  and  it  must  be  met  with  whatever  cost  of  life 
and  treasure  it  may  be  attended.  We  have,  each  of  us, 
a  deep  and  vital  interest  in  the  Government.  No  wiser, 
no  more  beneficent  one  ever  existed;  if  destroyed,  no 
similar  one  will  succeed  it.  It  has  protected  our  fathers 
and  us,  and  we  are  under  the  highest  obligations  to 
transmit  it  for  the  protection  of  our  posterity.  It  cost 
thousands  of  precious  lives  and  millions  of  treasure  to 
establish  it,  and  it  is  worth  a  hundred  times  its  cost  to 
preserve  it. 

The  time  for  compromises  has  past.  Concessions  to 
traitors  in  arms  will  sap  the  very  life-blood  of  the  nation. 
Not  that  I  am  opposed  to  fair  and  reasonable  compro- 
mises for  the  settlement  of  Constitutional  questions,  but 
because  this  is  not  the  time  to  make  them.  While  the 
property  of  the  Union  men  at  the  South  is  being  con- 
fiscated, and  its  owners  have  been  either  slain  or  driven 
from  their  homes;  while  privateers  are  being  fitted  out 
to  prey  upon  our  commerce;  while  rebel  armies  are 
threatening  our  Capitol,  the  man  who  talks  of  compro- 
mises, or  asks  what  is  to  be  done  with  the  South  if  it 
should  be  subjugated,  or  how  the  Union  is  to  be  restored 
by  war,  is  in  danger  of  letting  his  fears  or  S3'mpathies 
run  away  with  his  judgment  and  his  patriotism. 

I  do  not  attempt  to  estimate  the  cost  of  the  war.  I 
do  not  stop  to  inquire  whether  the  South  can  be  brought 
back  to  its  allegiance  and  its  dut}'.  I  know  only  that  if 
the  Government  is  not  now  sustained,  and  this  unnatural 


81 

rebellion  suppressed,  that  the  Union  will  be  severed  for- 
ever, and  a  legacy  of  perpetual  war  bequeathed  to  our 
children,  even  if  republicanism  is  not  irretrievably  ruined. 
The  war  must  go  on;  not  to  subjugate  the  South,  not 
to  hold  it  as  a  conquered  province,  but  to  vindicate  the 
majesty  of  law  and  maintain  the  integrity  of  the  Union. 
That  this  is  almost  the  universal  sentiment  of  the  North 
is  witnessed  by  the  millions  of  freemen  who  have  al- 
ready responded,  or  stand  ready  to  respond,  to  the  call  for 
volunteers.  More  than  a  million  and  a  half  of  the  people 
of  the  North  voted  against  Lincoln  at  the  late  Presidential 
election  and  in  favor  of  the  different  candidates  that 
were  supported  at  the  South,  and  it  is  one  of  the  cheer- 
ing signs  of  the  times  that  very  few  of  this  immense 
number  of  voters  permit  their  sympathy  for  the  South 
to  cause  them  to  falter  in  their  loyalty  to  the  Govern- 
ment. None  have  responded  more  promptly  and  heartily 
to  the  call  of  the  President  than  the  very  men  who  op- 
posed his  election.  They  come  forward  to  take  up 
arms;  not  to  wage  war  upon  slavery,  nor  to  subjugate 
the  Southern  States,  but  to  sustain  the  Government  in 
this  the  time  of  its  trial,  to  encourage  Union  men  in  the 
South,  and  to  put  an  end  to  the  doctrine  of  secession  for- 
ever. 

They  march  under  that  good  old  flag  that  was  never 
dishonored  until  treason  raised  its  impious  hand  against 
it,  and  I  have  unlimited  confidence  that  they  will 
triumph  where  it  floats.  There  is  an  inspiration  about 
the  stars  and  stripes,  in  the  history  they  teach  and  the 
principles  they  illustrate,  that  will  lead  our  gallant  vol- 
unteers to  victory.  They  are  the  symbol  of  liberty  and 
equality,  the  ever  enduring  principles  of  justice  and 
equity.  These  principles  are  eternal,  and  no  other  flag 
represents  them.  It  is  the  flag  of  the  Union,  bright 
with  the  glories  of  the  past — the  reflected  glories  of  the 
Revolution  and  the  more  recent  glories  of  the  Republic. 
It  reminds  us  of  our  naval  victories,  of  Hull  and  Perry, 
and  Decatur  and  other  gallant  commanders  who  added 
to  its  lustre  and  vindicated  its  principles  upon  the  quarter 
deck.  It  reminds  us  also  of  Plattsburg  and  New  Orleans, 
of  Palo  Alto  and  Buena  Yista  and  Monterey,  of  Vera  Cruz, 
Cero  Gordo  and  Mexico.    It  has  been  trailed  in  the  dust  in 


32 

Charleston,  buried  with  mock  honors  in  Memphis;  but 
as  long  as  liberty  is  loved  and  justice  is  honored,  so  long 
will  true  men  stand  b}'  its  folds  and  weave  its  bright 
recollections  about  their  hearts.  It  is  our  country's  flag, 
and  we  love  it  as  we  love  that  country.  Every  star  is 
precious  to  us.  not  one  must  be  erased.  It  covers  every- 
thing that  is  dear  to  us,  our  lands,  our  homes,  our  wives 
and  our  children.  Americans  in  distant  lands  exult  as 
they  see  it  floating  over  our  ships.  Our  dying  soldiers 
upon  the  battle-field  fix  their  last  gaze  upon  it,  and  are 
satisfied  if  they  have  not  dishonored  it.  It  has  been 
borne  in  war  from  Montreal  to  Mexico,  and  in  peace  to 
every  quarter  of  the  globe.  Millions  of  the  oppressed 
in  other  lands  have  looked  up  to  it  with  reverence  and 
hope.  Millions  of  freemen  in  our  own  land  have  pledged 
their  strong  arms  and,  if  need  be,  their  hearts'  blood  to 
defend  it.  It  must  continue  to  be  the  American  flag. 
Temporarily  displaced  in  a  part  of  the  Southern  States, 
true  hearts  will  there  again  upraise  it,  nor  stay  their 
hands  until  it  floats  again  over  Norfolk,  and  Richmond, 
and  Charleston  and  New  Oleans.  Whenever  it  shall 
be  permanently  dishonored  b\^  unhallowed  ambition  or 
the  defection  of  freemen,  liberty  will  have  perished,  and 
the  stars  and  stripes  will  be  its  appropriate  winding 
sheet. 

Fellow-citizens,  a  Providential  hand  has  led  this  na- 
tion through  all  its  trials  up  to  its  present  greatness. 
That  hand  was  witnessed  in  the  voyage  of  the  May- 
flower in  her  stormy  passage;  in  the  preservation  of  the 
little  band  of  exiles,  the  germ  of  an  empire,  shelterless 
against  the  stormy  blast,  helpless  against  a  savage  foe; 
in  the  planting  of  a  somewhat  different  order  of  men  in 
Virginia;  in  the  growth  and  expansion  of  both  their 
Union  as  colonies,  their  successes  in  the  Revolution, 
and  their  stronger  and  closer  union  under  the  present 
national  Constitution.  It  has  been  witnessed  in  our 
wonderful  advancement  as  a  nation,  the  glor}^  of  our 
arms,  the  prosperity  that  has  filled  our  cup  to  overflow- 
ing. It  cannot  be  that  the  Providential  hand  which  has 
led  us  step  by  step  from  so  small  a  beginning  to  such  a 
height  of  greatness  will  now  abandon  us;  that  our  ex- 
periment of  self-government  is  to  be  a  failure;  that  our 


33 

Union  is  to  be  permanently  severed;  that  our,  until  re- 
centl3s  United  States  are  to  be  converted  into  perma- 
nently hostile  sections,  and  that  the  sun  of  our  prosperity 
is  to  go  down  in  the  blackness  of  darkness  forever.  On 
the  contrary,  I  believe  that  the  manifest  designs  of  Provi- 
dence in  building  up  this  great  nation  will  be  carried  for- 
ward, that  a  true  Union  sentiment  wall  ere  long  reveal 
itself  in  the  seceding  States,  and  that  treason  will  be 
crushed  out  by  true  men  at  home  or  the  strong  arm  of 
Federal  power. 

Our  extensive  domain,  vast  as  it  is,  was  intended  for 
the  home  of  a  single  nation.  The  course  of  its  great 
rivers,  the  nature  of  its  various  products,  the  fact  that 
what  one  section  supplies  in  excess  of  its  wants  the  other 
needs,  nay,  the  very  antagonism  of  its  different  civiliza- 
tions, create  a  necessity  for  the  Union.  Between  the 
lakes  and  the  gulf,  the  eastern  seaboard  and  the  western 
frontier,  there  must  be  one  united  government,  or  jeal- 
ous, hostile,  belligerent  States,  in  which  will  be  repro- 
duced the  terrible  scenes  of  anarchy,  war  and  despotism 
that  for  so  many  centuries  in  other  lands  have  made 
humanity  weep  and  justice  veil  her  face.  From  such  a 
calamity  may  God  preserve  this  fair  land. 

I  was  gratified  to  learn  on  my  return  to  Fort  Wayne, 
a  few  days  ago,  that  this  Fourth  of  July  was  to  be  cele- 
brated in  an  old-fashioned  way.  I  had  been  apprehen- 
sive that  the  excitement  of  war  and  the  clouds  that 
seemed  to  cover  our  political  future  might  lead  to  its 
neglect.  I  was  pleased  to  be  undeceived.  I  am  more 
pleased  at  the  spirit  and  enthusiasm  which  it  has 
called  out.  Never  was  its  celebration  more  appropriate 
than  now.  We  need  its  teachings  and  its  inspirations. 
If  any  one  is  despondent  of  his  country,  let  him  go  back 
to  1776  for  encouragement  and  strength.  Let  him  be 
baptized  in  the  spirit  of  the  founders  of  the  Republic. 
Clouds  and  darkness  are  about  us;  thicker  ones  sur- 
rounded them,  but  with  the  eye  of  patriotic  faith  they 
pierced  those  clouds  and  caught  the  beam  of  that  sun  of 
liberty  that  was  soon  to  pour  its  meridian  blaze  upon  the 
land  they  loved.  May  we  not  call  up  something  of  their 
faith,  and  behind  the  clouds  that  now  infold  us  behold 
a  more  perfect  Union,  purified  of  treason  and  strength- 
ened by  its  perils  ? 


34 

The  descendants  of  those  who  fought  at  Bunker  Hill, 
and  Saratoga,  and  Camden,  and  Yorktown,  who  stood 
sentinel,  barefooted,  upon  the  frozen  guound  at  Valley 
Forge,  should  never  despair  of  the  Republic.  The  good 
ship  of  state  has  weathered  many  a  storm,  and  she  will 
survive  the  present.  Her  timbers  are  neither  rotten  nor 
worm-eaten.  Her  commander-in-chief  is  honest  and 
recognizes  no  chart  but  the  Constitution.  The  second  in 
command,  the  old  war  chief  of  the  nation,  is  no  other 
than  the  hero  of  Lundy's  Lane,  the  conqueror  of  Mexico, 
the  man  whom  Wellington  pronounced  the  greatest  cap- 
tain of  the  age,  who  never  lost  a  battle  or  was  forced  to 
retreat.  He  has  nailed  his  flag  to  the  mast,  and  it  will 
never  be  struck  to  the  enemy,  foreign  or  domestic, 
while  there  is  a  "  shot  in  the  locker  "  or  a  plank  that  is 
not  riven.  Cool  in  the  midst  of  danger,  he  represses 
the  unwise  ardor  of  his  friends  and  thwarts  the  plans  of 
the  enemy.  Acknowledging  allegiance  to  God  and  his 
country  alone,  his  loyalty  is  a  consuming  fire  to  the 
traitors  of  his  native  Virginia.  To  the  stars  and  stripes 
he  gave  his  youthful  vows.  They  have  been  the  object 
of  a  life-long  love;  may  his  sun  not  go  down  until  they 
wave  again  over  a  preserved  Union. 

Fellow-citizens,  it  is  good  for  us  to  be  here.  The  Re- 
public is  not  a  failure;  the  Fourth  of  July  is  not  a  fail- 
ure; the  prediction  of  the  elder  Adams  is  not  falsified. 
By  those  who  have  forgotten  its  lessons,  turned  away 
from  its  blessed  memories,  the  Fourth  of  July  may  be 
ingored,  but  to  us  and  to  our  children  it  shall  ever  be  a 
consecrated  day.  It  has  been  welcomed  by  us  by  the 
roar  of  the  cannon,  the  beating  of  the  drums,  and  other 
demonstrations  of  rejoicing,  and  it  will  ever  be  so  wel- 
comed as  long  as  civil  liberty  has  a  resting-place  in  the 
land  on  which  our  fathers  established  it. 

Thunder  storms  are  needed  to  purify  the  atmosphere. 
When  they  pass  over  the  sun  appears  again  with  in- 
creased splendor.  It  may  be  that  the  thunder  cloud  of 
war  that  now  covers  our  nation  was  needed  to  purify 
our  political  atmosphere,  test  the  strength  of  our  patriot- 
ism, cleanse  our  nation  of  its  corruptions,  or  to  punish  us 
for  our  arrogance  and  pride;  but  as  the  natural  sun 
ghines  bellind  the  storm  clouds  and  only  veils  his  face 


35 

for  the  benefit  of  man,  may  we  not  trust  that  behind  the 
clouds  that  are  now  gathering  about  our  political  horizon 
the  sun  of  liberty  and  union  is  still  shining  and  will  ere 
long  appear  again  more  brilliant  and  beautiful  from  its 
temporary  obscuration  ? 

Nations,  like  individuals,  have  their  periods  of  trial; 
but  as  he  is  a  coward  and  craven  who  quails  before  the 
blasts  of  adversity,  so  our  nation  would  be  cowardly 
and  craven,  unworthy  its  high  place  among  the  nations, 
if  it  quailed  before  the  blasts  that  treason  has  excited. 
Let  the  storm  blow;  let  traitors  rage,  and  the  despots 
of  Europe  "  imagine  a  vain  thing,"  liberty  is  still  with 
us  a  living  principle;  the  Union,  though  assailed,  a 
practical  reality;  and  bound  together  and  cemented  as 
they  were  by  the  blood  of  the  Revolution,  may  we  not 
hope  that  they  are  indissoluble  and  imperishable  ? 

Note  — This  address  was  delivered  when  war  feeling  wa3 
thoroughly  aroused  and  great  indignation  was  felt  against  the 
Southern  States.  Subsequently  I  came  to  regard  the  war  as 
the  necessary  result  of  slavery.  The  attempted  secession  of 
the  Southern  States  was  rebellion,  not  treason. 

March,  1890. 


ADDRESS 

DEI.IVERED  AT 

FORT   WAYNK,  IND.,  OCTOBER   11,  1865. 


ADDRESB 

DELIVERED  AT 

FORT  WAYNE,  IND.,  OCTOBER    11,  1865. 


Accept,  Mr.  President,  and  you,  gentlemen,  my  sin- 
cere thanks  for  the  honor  you  have  done  me  in  inviting 
me  to  this  entertainment  and  for  the  sentiment  to  which 
you  have  responded.  From  the  day  I  entered  Fort 
Wayne— a  stranger  in  a  strange  land — I  have  been 
treated  by  its  citizens  with  a  kindness  and  consideration 
altogether  beyond  my  merits,  and  for  which  I  shall  ever 
be  grateful. 

But  no  trust  that  has  ever  been  reposed  in  me,  and  no 
kindness  of  which  I  have  been  the  recipient,  has  touched 
my  heart  so  sensibly  as  this  demonstration  of  your  re- 
spect. I  lack  the  language  to  express  to  you,  Mr.  Presi- 
dent, and  to  you,  gentlemen,  my  obligations  for  this  evi- 
dence of  your  personal  regard  and  this  testimonial  of 
your  appreciation  of  the  manner  in  which  I  am  dis- 
charging the  duties  of  the  very  important  position  to 
which  I  was  last  spring  unexpectedly  called.  I  can  only 
return  to  you  my  sincere  thanks  and  pledge  to  you  my 
best  efforts  so  to  perform  my  official  duties  as  to  reflect 
no  discredit  upon  my  friends  in  Fort  Wayne,  whose  good 
opinion  I  so  highly  value.  Next  to  my  desire  to  ac- 
quire and  leave  behind  me  a  reputation  that  my  chil- 
dren may  not  be  ashamed  of,  has  been  my  desire  so  to 
perform  the  duties  that  may  devolve  upon  me  that  my 
friends  in  Indiana,  those  with  whom  I  have  been  con- 
nected by  social  and  business  ties,  would  have  no  occa- 
sion to  regret  the  indorsement  they  have  given  me. 

No  place  will  ever  be  so  dear  to  me  as  Fort  Wayne; 
no  friendships  will  ever  be  so  strong  as  those  which  I 
have  formed  here.     I  am,  you  knows  one  of  the  pioneers 


40    * 

df  this  beautiful  city.  When  I  crossed  the  St.  Mary's, 
swimming  my  horse  by  a  side  of  a  canoe,  on  the  23d  of 
June,  1833,  Fort  Wayne  was  a  hamlet,  containing  a  few 
hundred  souls;  an  Indian  trading  post,  a  mere  dot  of 
civilization  in  the  heart  of  a  magnificent  wilderness. 
Under  my  own  eye,  as  it  were,  it  has  become  a 
city  of  nearly  twenty  thousand  people,  a  city  full  of 
vigor  and  enterprise,  the  second  city  of  the  State.  I  am 
proud  of  Fort  Wayne  and  of  the  noble  State  of  Indiana — 
a  State  which  has  been  second  to  no  State  in  the  Union 
in  her  devotion  to  the  Government  and  in  the  gallantry 
with  which  her  sons  have  defended  it.  I  am  thankful 
when  I  crossed  the  mountains,  in  common  parlance,  "  to 
seek  my  fortune,"  my  feet  were  directed  to  Indiana,  and 
especially  to  this  place.  Wherever  duty  may  call  me 
hereafter,  this  will  ever  be  to  me  my  home.  Many  of 
my  kindred  sleep  in  our  beautiful  cemeter}-,  and  there, 
I  trust,  will  be  my  resting-place  when  I  am  called  upon 
to  join  the  great  company  of  the  departed. 

But  Fort  Wayne  has  other  attractions  to  me.  The 
friends  of  my  early  manhood  are  here.  It  is  true  that 
thirty  years  have  spared  but  few  of  those  who  took  me 
by  the  hand  and  bade  me  welcome  to  the  new  country; 
but  a  number  remain,  and  some  are  present  on  this  oc- 
casion. I  do  not  know  how  it  may  be  with  others,  but 
for  myself  I  can  truly  sa}^  that  as  one  after  another  of 
that  pioneer  band  passes  away,  my  attachment  to  those 
that  remain  grow\s  stronger  and  stronger;  and  I  am  in- 
clined to  the  opinion  that  the  attachments  and  friend- 
ships which  are  formed  on  the  frontier,  w^here  those  who 
are  seeking  new  homes  at  a  distance  from  their  old  ones 
are  thrown  together  in  a  common  societ}^  in  which  all 
are  equals,  and  where  the  circumstances  in  which  they 
are  placed  and  the  very  cravings  of  their  natures  open 
their  hearts  to  each  other  with  confidence  and  trust,  are 
stronger  and  deeper  rooted  than  those  which  are  formed 
in  older  and  more  populous  communities.  But  whatever 
may  be  the  cause,  the  fact  exists  that  Fort  Wayne  is 
dearer  to  me  than  any  other  place  in  the  world,  and  that 
there  are  no  friends  to  whom  I  am  so  deeply  attached  as 
to  those  whose  familiar  faces  seem  cordially  to  greet  me 
when  I  return  to  it. 


41 

Mr.  President,  since  I  paid  m^^  last  visit  to  Fort 
Wayne,  a  little  less  than  a  year  ago,  great  events  have 
transpired  in  the  United  States.  The  rebellion,  although 
it  had  received  many  staggering  blows  from  our  gallant 
soldiers  under  the  distinguished  generals  whose  fame  is 
world-wide,  was  then  still  audacious  and  defiant;  and 
although  the  result  might  not  have  been  considered 
doubtful,  the  end  of  the  war  seemed  not  unlikely  to  be 
far  in  the  future.  Eleven  months  have  passed  away, 
and  this  great  civil  war  has  been  brought  to  a  glorious 
conclusion.  The  stars  and  stripes  are  again  recognized 
as  the  emblem  of  liberty  and  union  in  every  part  of  our 
national  domain,  and  more  than  eight  hundred  thousand 
loyal  men  have  been  mustered  out  of  service  and  con- 
verted from  gallant  soldiers  into  peaceable,  law-abiding 
and  industrious  citizens.  The  question  of  State  sov- 
ereignty has  been  settled  by  an  appeal  to  arms  and  the 
sovereignty  of  the  Government  under  the  Constitution 
established  forever.  The  greatest  civil  war  that  has  ever 
been  waged  upon  the  face  of  the  earth  has  been  concluded ; 
the  most  powerful  armies  of  modern  times  have  been 
disbanded;  and  yet  civil  liberty  is  as  safe  and  vigorous 
as  it  was  before  the  war  commenced.  During  the  pro- 
gress of  the  rebellion  there  has  been  a  strain  upon  re- 
publican institutions,  but  they  have  sustained  it  without 
the  loss  of  a  particle  of  their  strength.  State  rights  and 
individual  rights  may  in  some  instances,  perhaps  un- 
necessaril3^  have  been  invaded;  but  to-day  there  is  at 
the  North  no  State  right  under^the  Constitution,  and  no 
individual  right,  which  is  not  as  much  respected  and  as 
well  established  as  when  the  first  gun  was  fired  upon 
Sumpter.  It  is  this  fact  which  makes  our  triumph  a 
more  sublime  and  greater  triumph  than  the  result  of  the 
war  itself. 

But  this  is  not  all.  Just  at  the  moment  when  the 
people  were  rejoicing  over  the  fall  of  Richmond  and  the 
surrender  of  the  Confederate  armies,  the  chief  magis- 
trate of  the  nation,  the  most  beloved  and  trusted  of 
men,  fell  by  the  hand  of  an  assassin.  For  a  moment 
the  nation  was  struck  dumb  by  the  atrocity  of  the  act 
and  the  magnitude  of  the  loss  that  had  been  sustained. 
As  the  report  flashed  over  the  wires  that  the  beloved 


42 

chief  magistrate  of  the  nation,  in  the  midst  of  rejoicings 
over  our  victories  and  the  prospect  of  returning  peace, 
had  been  slain,  what  heart  was  there  throughout  this 
broad  land  which  was  not  filled  with  anguish  and  appre- 
hension? What  thinking  man  did  not  put  to  himself  the 
question.  Can  the  Republic  stand  this  unexpected  cal- 
amit}^?  Can  our  popular  institutions  bear  this  new 
trial?  The  anguish  remained,  and  still  remains,  but  the 
apprehension  existed  but  for  a  moment.  Scarcelj^  had  the 
announcement  been  made  that  lyincoln  had  fallen  be- 
fore it  was  followed  by  the  report  that  the  Vice-Presi- 
dent had  taken  the  oath  of  President,  and  that  the 
functions  of  government  were  being  performed  as  regu- 
larly and  quietly  as  though  nothing  had  happened. 

And  what  followed?  The  body  of  the  beloved  Presi- 
dent was  taken  from  Washington  to  Illinois,  through 
crowded  cities,  among  a  grief-.stricken  and  deeply-ex- 
cited people,  mourning  as  no  people  ever  mourned, 
and  moved  as  no  people  were  ever  moved;  and 
yet  there  was  no  popular  violence,  no  outbreak  of 
popular  passion;  borne  a  thousand  miles  to  its  last  rest- 
ing-place, hundreds  of  thousands  doing  such  honor  to 
the  remains  as  were  never  paid  to  those  of  king  or  con- 
queror, and  the  public  peace,  notwithstanding  intense 
indignation  was  mixed  with  intense  sorrow,  was  in  no 
instance  disturbed.  Hereafter  there  will  be  no  skepti- 
cism among  us  in  regard  to  the  wisdom,  the  excellence, 
and  the  power  of  republican  institutions.  There  is  no 
country  upon  earth  that  could  have  passed  through  the 
trials  to  which  the  United  States  have  been  subjected 
during  the  past  four  years  without  being  broken  into 
fragments. 

Of  Mr.  Lincoln  this  is  not  a  fitting  occasion  for  me  to 
speak  freely.  This  much,  however,  I  may  be  permitted 
to  say,  that  the  more  I  saw  of  him  the  higher  became 
my  admiration  of  his  ability  and  his  character.  Before 
I  went  to  Washington,  and  for  a  short  period  after,  I 
doubted  both  his  nerve  and  his  statesmanship ;  but  a  closer 
observation  relieved  me  of  these  doubts,  and  long  before 
his  death  I  had  come  to  the  conclusion  that  he  was  a 
man  of  will,  of  energy,  of  well-balanced  mind,  and 
wonderful  sagacity.     His  practice  of  story-telling  when 


4^ 

the  Government  seemed  to  be  in  imminent  peril  and 
the  sublimest  events  were  transpiring  surprised,  if  it  did 
not  sometimes  disgust,  those  who  did  not  know  him 
well;  but  it  indicated  on  his  part  no  want  of  a  proper 
appreciation  of  the  terrible  responsibility  which  rested 
upon  him  as  the  chief  magistrate  of  a  great  nation  en- 
gaged in  the  suppression  of  a  desperate  rebellion  which 
threatened  its  overthrow.  Story- telling  wnth  him  was 
something  more  than  a  habit.  He  was  so  accustomed 
to  it  in  social  life  and  in  the  practice  of  his  profession 
that  it  became  a  part  of  his  nature,  and  so  accurate  was 
his  recollection,  and  so  great  a  fund  had  he  at  command, 
that  he  had  always  anecdotes  and  stories  to  illustrate 
his  arguments  and  delight  those  w^hose  tastes  were  sim- 
ilar to  his  own;  but  those  who  judged  from  this  trait 
that  he  had  lacked  deep  feeling,  or  sound  judgment,  or  a 
proper  sense  of  the  responsibility  of  his  position,  had 
no  just  appreciation  of  his  character.  He  possessed  all 
these  qualities  in  an  eminent  degree.  It  was  true  of 
him,  as  it  is  true  of  all  really  noble  and  good  men,  that 
those  who  knew  him  best  had  the  highest  admiration  of 
him.  He  was  not  a  man  of  genius,  but  he  possessed  in  a 
large  degree  what  is  far  more  valuable  in  a  public  man, 
excellent  common  sense.  He  did  not  undertake  to  di- 
rect public  opinion,  but  no  man  understood  better  the 
leadings  of  the  popular  wull  or  the  beatings  of  the  pop- 
ular heart.  He  did  not  seem  to  gain  this  knowledge 
from  reading  or  from  observation,  for  he  read  very  few 
of  our  public  journals,  and  was  little  inclined  to  call  out 
the  opinions  of  others.  He  was  a  representative  of  the 
people,  and  he  understood  what  the  people  desired 
rather  by  a  study  of  himself  than  of  them.  Granting 
that,  although  constitutionally  honest  himself,  he  did 
not  put  a  very  high  valuation  upon  honesty  in  others, 
and  that  he  sometimes  permitted  his  partiality  for  his 
friends  to  influence  his  action  in  a  manner  that  was 
hardly  consistent  with  an  upright  administration  of  his 
great  office,  few  men  have  held  high  positions  whose 
conduct  would  so  well  bear  the  severest  criticism  as  Mr. 
Lincoln's;  but  I  shall  not  undertake  his  eulogy.  The 
people  have  already  passed  judgment  in  favor  of  the 
nobleness  and  excellence  of  his  character  and  the  wis- 


44 

dom  of  his  administration,  and  the  pen  of  impartial  his- 
tory will  confirm  the  judgment. 

But  you  will  expect,  perhaps,  that  I  say  something  of 
his  (Mr.  Lincoln's)  successor.  In  any  other  place,  and 
under  any  other  circumstances  I  should  not  feel 
at  liberty  to  make  any  particular  allusion  to  the  Presi- 
dent of  the  United  States,  holding,  as  I  do,  a  seat  in  his 
Cabinet.  But  knowing  that  many  of  you,  my  towns- 
men and  neighbors,  have  been  of  the  opinion  that  the 
settlement  of  the  great  questions  which  would  neces- 
sarily come  up  for  settlement  at  the  close  of  the  war 
would  require  on  the  part  of  the  chief  magistrate  a  pro- 
founder  wisdom  and  a  broader  statesmanship  than  were^ 
required  during  its  continuance,  and  that  not  a  few  have 
been  deeply  anxious  lest  Mr.  Johnson  might  be  unequal 
to  the  prodigious  work  that  has  been  devolved  upon 
him,  I  feel  constrained  to  say  that  there  is,  in  my  judg- 
ment, no  ground  for  apprehension  on  this  subject.  Try- 
ing and  difficult  as  is  his  situation,  Mr.  Johnson  is  mas- 
ter of  it.  He  possesses  in  an  eminent  degree  the  quali- 
ties that  fit  him  for  the  Presidency  at  the  present  time. 
A  Southern  man,  thoroughly  acquainted  with  the  eifects 
of  slavery  upon  society,  he  knows  how  to  deal  with 
Southern  men  in  their  present  circumstances;  ardently 
attached  to  Tennessee,  the  love  which  he  bears  to  his 
State  is  entirely  subordinate  to  that  which  he  bears  to 
the  Union;  jealous  of  State  rights,  he  is  equally  jealous 
of  the  rights  of  the  general  Government;  a  radical 
and  uncompromising  opponent  of  nullification,  secession, 
and  every  form  of  disloyalty,  he  is  equally  opposed  to 
any  measures  which,  in  his  judgment,  are  calculated, 
by  depriving  the  States  of  their  just  rights  under  the 
Constitution,  to  convert  the  Federal  Government  into  a 
despotism;  raised  in  slave  States,  and  until  recently  a 
slaveholder,  he  has  never  had  any  love  for  slavery,  and 
has  always  been  the  antagonist  of  the  aristocracy  that 
was  based  upon  it.  By  nature  and  by  education  he  is 
just  the  man  for  the  great  work  of  re-establishing  the 
Federal  authority  over  the  recently  rebellious  States; 
and  he  has  taken  hold  of  this  work  with  a  devotion,  an 
energy,  and  a  prudence  that  promises  the  best  results. 
,  He  is  a  man,  also,  of  excellent  judgment  and  great 


45 

singleness  of  purpose.  Honest  himself,  he  expects 
honesty  in  others  ;  although  long  in  public  life 
and  a  leading  politician  of  his  own  school,  he  is  in  no 
sense  a  partisan;  unassuming  in  manners,  he  is  yet 
self-possessed  and  dignified;  he  listens  to  the  advice 
of  those  in  whose  judgment  he  has  confidence,  but  acts 
upon  his  own  convictions,  and  generally  according  to 
his  first  impressions;  with  great  decision  of  character, 
he  is  never  hasty  in  action;  stern  and  unyielding  in 
his  adherence  to  principle  and  duty,  he  is  a  man  of 
kindly  and  gentle  emotions;  having  by  his  own  in- 
domitable energy  fought  his  way  up  from  a  low  to  a 
high  estate,  he  is  in  hearty  sympathy  with  those  who  are 
treading  the  same  upward  path;  he  is,  in  a  word,  a  clear- 
headed, upright,  energetic,  self-relying  statesman;  a 
dignified,  courteous  and  kind-hearted  gentleman.  His 
administration  will  be  characterized  by  all  the  force  and 
energy  and  independence  of  Jackson's,  with  very  little 
of  its  partisan  character. 

Under  his  direction  the  great  work  of  re-establishing 
civil  government  at  the  South  under  the  Federal  Con- 
stitution is  going  rapidly  forward — too  rapidly,  it  seems, 
according  to  the  opinion  of  many  at  the  North,  whose 
opinions  are  entitled  to  great  consideration.  I  know, 
sir,  that  many  doubt  the  wisdom  of  Mr.  Johnson's  policy; 
that  many  are  of  the  opinion  that  by  their  ordinance  of 
secession  the  rebellious  States  had  ceased  to  be  States 
under  the  Constitution,  and  that  nothing  should  be  done 
by  the  Executive  in  aid  of  the  restoration  of  their  State 
governments  until  Congress  had  determined  pn  what 
terms  they  should  be  restored  to  the  Union  which  they 
had  voluntarily  abandoned  and  attempted  to  destroy; 
that  as  the  people  of  these  States  had  appealed  to  the 
sword  and  had  been  subjugated  by  the  sword,  they 
should  be  governed  by  the  sword  until  the  law-making 
power  had  disposed  of  the  subject  of  reconstruction; 
that  no  State  that  had  passed  ordinances  of  secession 
and  united  with  the  so-called  Confederate  Government 
should  ever  be  admitted  again  into  the  Union  unless  in  its 
preliminary  proceedings  all  men,  irrespective  of  color, 
should  be  permitted  to  vote,  nor  without  provisions  in 
its  Constitution  for  the  absolute  enfranchisement  of  the 


46 

negro.  Some  go  even  further  than  this  and  demand  the 
confiscation  of  the  property  of  all  rebels  and  the  applica- 
tion of  the  proceeds  to  the  payment  of  the  national  debt. 

These  are  not,  I  apprehend,  the  views  of  a  respectable 
minority.  I  know  they  are  not  the  views  of  a  majority 
of  the  people  of  the  North.  The  better  opinion  is  that 
the  States  which  attempted  to  secede  never  ceased  to 
be  States  in  the  Union;  that  all  their  acts  of  secession 
were  of  no  effect;  that  during  the  progress  of  the  revolt 
the  exercise  of  the  Federal  authority  was  merely  sus- 
pended, and  that  there  never  was  a  moment  when  the 
allegiance  of  the  people  of  the  insurrectionary  States 
was  not  due  to  the  Government,  and  when  the  Govern- 
ment was  not  bound  to  maintain  its  authority  over  them 
and  extend  protection  to  those  who  required  it.  When 
the  rebellion  was  overcome,  the  so-called  Confederate 
Government  and  all  the  State  governments  which  had 
been  formed  in  opposition  to  the  Federal  Government 
ceased  to  have  even  a  nominal  existence,  and  the  peo- 
ple who  had  been  subject  to  them  were  left  for  the  time 
being  without  any  government  whatever.  The  term  of 
office  of  the  Federal  officers  had  expired  or  the  offices 
had  become  vacant  by  the  treason  of  those  who  held 
them.  There  were  no  Federal  revenue  officers,  no  com- 
petent Federal  judges,  and  no  organized  Federal  courts. 
Nor  were  the  people  any  better  off  so  far  as  State 
authority  was  regarded.  When  the  Confederac}^  col- 
lapsed all  the  rebel  State  governments  collapsed  with  it, 
so  that,  with  a  few  exceptions,  there  were  no  persons 
holding  civil  office  at  the  South  by  the  authority  of  any 
legitimate  government. 

Now,  as  government  is  at  all  times  a  necessity  among 
men,  and  as  it  was  especially  so  at  the  South,  where 
violence  and  lawlessness  had  full  sway,  the  question  to 
be  decided  by  the  President  was  simply  this  :  Shall  the 
people  of  the  recently  rebellious  States  be  held  under 
military  rule  until  Congress  shall  act  upon  the  question, 
or  shall  immediate  measures  be  taken  by  the  Executive 
to  restore  to  them  civil  governments? 

After  mature  consideration  the  President  concluded 
it  to  be  his  duty  to  adopt  the  latter  course,  and  I  am 
satisfied  that  in  this  conclusion  he  was  right.     And  here 


47 


let  me  say  that  in  doing  so  he  was  carrying  out  the  very 
policy  which  had  been  determined  npon  by  Mr.  Lincoln 
and  his  Cabinet. 

Military  rnle  will  not  be  endured  by  the  people  of  the 
United  States  one  moment  longer  than  there  is  an  abso- 
lute necessity  for  it.  Such  an  army  as  would  have  been 
requisite  for  the  government  of  the  people  of  the  South, 
as  a  subjugated  people,  until  Congress  might  prescribe 
the  terms  on  which  they  could  be  restored  to  the  Union, 
would  have  been  too  severe  a  strain  upon  our  republican 
institutions,  and  too  expensive  for  the  present  condition 
of  the  Treasury.  The  President  has,  therefore,  gone  to 
work  to  restore  the  Union  by  the  use,  from  the  necessity 
of  the  case,  of  a  portion  of  those  who  have  been  re- 
cently in  arms  to  overthrow  it.  The  experiment  may 
be  regarded  as  a  dangerous  one,  but  it  will  be  proved,  I 
apprehend,  to  have  been  a  judicious  one.  Never  were 
a  people  so  disgusted  with  the  work  of  their  own  hands 
as  were  the  great  mass  of  the  people  of  the  South  (even 
before  the  collapse  of  the  rebellion)  with  the  Govern- 
ment which  was  attempted  to  be  set  up  by  the  overthrow 
of  the  Government  of  their  forefathers;  never  w^ere  a 
people  so  completely  subjugated  as  have  been  the  people 
of  the  rebel  States.  I  have  met  a  great  many  of  those 
whom  the  President  is  using  in  his  restoration  policy, 
and  they  have  impressed  most  favorably.  I  believe  them 
to  be  honest  in  taking  the  amnesty  oath,  and  in  their 
pledges  of  fidelity  to  the  Constitution  and  the  Union. 
Slavery  has  perished — this  all  acknowledge — and  with 
it  has  gone  down  the  doctrine  of  secession.  State  sov- 
ereignty has  been  discussed  in  Congress,  before  courts, 
in  the  public  journals,  and  among  the  people,  and.  at 
last,  "  when  madness  ruled  the  hour,"  this  vexed  ques- 
tion was  submitted  to  the  final  arbitrament  of  the  sword. 
The  question,  as  all  admit,  has  been  fairly  and  definitely 
decided,  and  from  this  decision  of  the  sword  there  wall 
be  no  appeal.  It  is  undoubtedly  true  that  the  men  of 
the  South  feel  sore  at  the  result,  but  they  accept  the 
situation,  and  are  preparing  for  the  changes  w^hich  the 
war  has  produced  in  their  domestic  institutions  with  an 
alacrity  and  an  exhibition  of  good  feeling  which  has,  I 
confess,  surprised,  as  it  has  gratified  me. 


48 

In  the  work  of  restoration  the  President  has  aimed 
to  do  only  that  which  was  necessary  to  be  done,  exer- 
cising only  that  power  which  could  be  properly  ex- 
ercised under  the  Constitution,  which  guarantees  to 
every  State  a  republican  form  of  government.  Regard- 
ing slavery  as  having  perished  in  the  rebellious  States, 
either  by  the  proclamation  of  his  predecessor  or  by  the 
result  of  the  war,  and  determining  that  no  rebel  who 
had  not  purged  himself  of  his  treason  should  have  any 
part  in  the  restoration  of  the  civil  governments  which  he 
is  aiding  to  establish,  he  has  not  considered  it  within 
the  scope  of  his  authority  to  go  further  and  enfranchise 
the  negro.  For  this  he  is  censured  by  many  true  men 
at  the  North  and  a  few  extreme  men  at  the  South,  but 
I  have  no  doubt  that  he  will  be  sustained  by  the  people, 
and  that  the  result  will  vindicate  the  wisdom  of  his 
course. 

But  while  the  President  is  inclined  to  treat  with  kind- 
ness, and  to  trust  those  who,  under  mistaken  notions  in 
regard  to  the  character  of  the  Government,  joined  in 
the  rebellion,  but  not  until  (after  a  struggle  on  their 
part  to  prevent  it)  the  States  to  which  they  be- 
longed had  passed  ordinances  of  secession,  and  the 
United  States  was  unable  to  extend  to  them  that  protec- 
tion to  which  they  were  entitled,  there  is  no  man  who 
holds  in  greater  abhorrence  than  he  does  the  crime  of 
treason  or  the  men  who  deliberately  undertook  to  de- 
stroy the  Union.* 

And  now  a  word  in  regard  to  our  finances. 

You  know  that  I  did  not  seek,  as  I  did  not  expect,  to 
be  Secretary  of  the  Treasury.  To  this  fact  I  attribute 
in  a  great  degree  the  good  feeling  and  indulgence  that 
have  been  manifested  towards  me  in  the  very  trying  and 
responsible  position  I  occupy.  I  accepted  the  office  of 
Secretary  of  the  Treasury  with  great  distrust  of  my 
ability  to  meet  the  public  expectation,  but  with  a  sin- 
cere desire  to  so  conduct  the  affairs  of  this  great  depart- 


*  I  retract  nothing  at  this  late  (iay  (1882)  of  what  I  said 
about  Mr.  Johnson.  He  made  the  great  mistake  of  quarreUng 
with  some  of  the  leaders  of  the  Republican  partv,  without 
conciliating  Democrats.  Hence  the  unsuccessfulness  and  un. 
popularity  of  his  administration. 


49 


ment  as  to  aid  in  restoring  the  credit  of  the  Govern- 
ment, which  had  been  damaged  b}'  the  greatness  of  the 
public  debt  and  the  uncertaint}^  in  regard  to  the  dura- 
tion, if  not  to  the  result,  of  the  war,  and  in  bringing 
up  the  obligations  of  the  Government  to  the  specie 
standard. 

I  am  not  one  of  those  w^ho  seem  disposed  to  repudiate 
coin  as  a  measure  of  value,  and  to  make  a  secured  paper 
currency  the  standard.  On  the  contrary,  I  belong  to  that 
class  of  persons  who,  regarding  an  exclusive  metallic  cur- 
rency as  an  impracticable  thing  among  an  enterprising  and 
commercial  people,  nevertheless  look  upon  an  irredeem- 
able currency  as  an  evil  which  circumstances  may  for  a 
time  render  a  necessity,  but  which  is  never  to  be  sus- 
tained as  a  policy.  By  common  consent  of  the  nations, 
gold  and  silver  are  the  only  true  measure  of  value  and 
the  necessary  regulators  of  trade.  I  have  myself  no 
more  doubt  that  these  metals  were  prepared  by  the  Al- 
mighty for  this  very  purpose  than  I  have  that  iron  and 
coal  were  prepared  for  the  very  purposes  in  which  they 
are  being  used.  I  favor  a  well-secured,  convertible  paper 
currency;  no  other  can  to  any  extent  be  a  proper  sub- 
stitute for  coin.  Of  course  it  is  not  expected  that  there 
shall  be  a  dollar  of  coin  in  reserve  for  every  dollar  of 
paper  in  circulation;  this  is  not  necessary.  For  all 
ordinar}^  home  transactions  a  paper  currency  is  sufficient; 
but  there  are  constantly  occurring  periods  when  balances 
between  countries,  and  in  the  United  States  between  its 
different  .sections,  must  be  settled  by  coin.  These  bal- 
ances are  insignificant  in  amount  in  comparison  with 
the  transactions  out  of  which  they  arise,  and  when  a 
vicious  system  of  credits  does  not  too  long  postpone 
settlements,  they  are  arranged  without  disturbing  move- 
ments of  coin.  Whenever  specie  is  needed  for  such  a 
purpose,  or  for  any  other  purpose,  the  paper  currency 
of  the  country  should  be  convertible  into  it,  and  a  circu- 
lation which  is  not  so  convertible  will  not  be,  and  ought 
not  to  be,  long  tolerated  by  the  people.  The  prCvSent  in- 
convertible currency  of  the  United  States  was  a  necessity 
of  the  war;  but  now  that  the  war  has  ceased  and  the 
Government  ought  not  to  be  longer  a  borrower,  this 
currency   should  be  brought  up  the    specie   standard. 


50 


and  I  see  no  way  of  doing  this  at  an  early  day  but  by 
withdrawing  a  portion  of  it  from  circulation. 

I  have  no  faith,  sir,  in  a  prosperity  which  is  the  effect 
of  a  depreciated  currency;  nor  can  I  see  any  safe  path 
for  us  to  tread  but  that  which  leads  to  specie  payment. 
The  extreme  high  prices  which  now  prevail  in  the 
United  States  are  an  unerring  indication  that  the  busi- 
ness of  the  countr}'  is  in  an  unhealthy  condition.  We  are 
measuring  values  by  a  false  standard.  We  have  a  cir- 
culating medium  altogether  larger  than  is  needed  for 
legitimate  business;  the  excess  is  used  in  speculations. 
The  United  vStates  are  to-day  the  best  market  in  the 
world  for  foreigners  to  sell  in  and  among  the  worst  to 
buy  in.  The  consequence  is  that  Europe  is  selling  us 
more  than  she  buys  of  us  (including  our  securities, 
which  ought  not  to  go  abroad),  and  there  is  a  debt  roll- 
ing up  against  us  that  must  be  settled,  in  part  at  least, 
with  coin.  The  longer  the  inflation  continues,  the  more 
difficult  will  it  be  for  us  to  get  back  to  the  solid  ground 
of  specie  payments,  to  which  we  must  return  sooner  or 
later.  If  Congress  shall  early  in  the  approaching  ses- 
sion authorize  the  funding  of  legal-tenders,  and  the 
work  of  reduction  is  commenced  and  carried  on  reso- 
lutely, but  carefully  and  prudently,  we  shall  reach  it 
probably  without  serious  embarrassment  to  legitimate 
business;  if  not,  we  shall  have  a  brief  period  of  hollow 
and  seductive  prosperity,  resulting  in  wide-spread  bank- 
ruptcy and  disaster. 

There  are  other  objections  to  the  present  inflation. 
It  is,  I  fear,  corrupting  the  public  morals.  It  is  con- 
verting the  business  of  the  country  into  gambling,  and 
seriously  diminishing  the  labor  of  the  country.  This  is 
always  the  effect  of  excessive  circulation.  The  kind 
of  gambling  which  it  produces  is  not  confined  to  the 
stock  and  produce  boards,  where  the  very  terms  which 
are  used  by  the  operators  indicate  the  nature  of  the 
transactions,  but  it  is  spreading  through  our  towns  and 
into  the  rural  districts.  Men  are  apparently  getting 
rich,  while  morality  languishes  and  the  productive  in- 
dustry of  the  country  is  being  diminished.  Good  morals  in 
business  and  sober,  persevering  industry,  if  not  at  a  dis- 
count, are   considered  too   old   fogyish   for  the  present 


51 


times.  But  I  feel  that  this  is  not  the  occasion  for  croak- 
ing, and  perhaps  I  ought  to  apologize  for  the  train  of 
remarks  into  which  I  have  been  led. 

Whatever  financial  troubles  may  be  before  us,  Fort 
Wayne  will  suffer  as  little  from  them  as  any  other  city 
in  the  country.  Good  financial  seed  was  sown  here  at 
an  early  day.  If  property  is  high,  there  is  no  encum- 
brances upon  it.  If  expensive  buildings  are  being 
erected,  the  owners  are  not  indebted  for  them.  Busi- 
ness is  done  here  on  the  cash  principle.  Our  merchants 
generally  buy  for  cash  and  sell  for  cash.  We  shall 
doubtless  wake  up  some  fine  morning  and  find  our  prop- 
erty worth  apparently  a  good  deal  less  than  at  present, 
but  if  we  have  no  debts  to  pay  in  a  dearer  currency  than 
that  in  which  they  were  contracted,  we  shall  have  little 
to  fear  from  any  crisis  that  may  occur. 

But,  while  I  feel  anxious  about  the  present  inflation 
and  its  effects  upon  the  business  and  morals  of  the 
country,  I  am  hopeful  that,  by  wise  legislation,  we  shall 
escape  a  financial  collapse,  and  I  am  confident  that  a 
grand  future  is  before  the  United  States.  I  am  hopeful 
that  the  currency  may  be  brought  up  to  the  specie 
standard  without  those  financial  troubles  which  have  in 
all  countries  followed  protracted  and  expensive  wars. 
By  the  experiences  of  the  past  four  years  we  are  led  to 
the  conclusion  that  our  people  have  a  latent  power  that 
always  manifests  itself  when  required  and  is  equal  to 
any  emergency.  I  have  faith,  sir,  that  as  we  have,  to 
the  astonishment  of  the  world,  raised  immense  armies — 
larger,  I  apprehend,  than  any  single  nation  ever  brought 
into  the  field — and  met  the  enormous  expenses  of  the 
war  without  borrowing  from  other  nations,  we  shall 
also  be  able  without  a  financial  crisis  to  fund  our  sur- 
plus currency  and  interest-bearing  notes,  bring  back 
the  business  to  a  specie  standard,  and  place  the  credit 
of  the  country  on  the  most  stable  and  satisfactory  basis. 
If  we  do  this  w^e  shall  accomplish  what  the  soundest 
thinkers  in  Europe  have  considered  an  impossibility, 
and  what  no  other  people  but  the  free  and  enterprising 
people  of  the  United  States,  occupying  the  grandest 
country  in  the  world,  could  accomplish. 

But  should  we  be  disappointed  in  these   hopeful  ex- 


52 


pectations;  should  no  earh^  check  be  put  upon  the  issues 
of  paper  mone}';  should  prices  still  further  advance  and 
speculation  be  still  further  stimulated,  and  the  result 
thereof  be  extensive  bankruptcy,  depression,  and  hard 
times,  the  grand  destiu}^  of  this  country  and  this  Gov- 
ernment will  not  be  affected. 

The  United  States  occupy  the  best  portion  of  the  tem- 
perate zone  of  a  continent,  stretching  out  their  arms  to 
Europe  on  the  one  side  and  to  Asia  on  the  other,  and 
producing  all  articles  necessary  for  the  subsistence  and 
comfort  of  the  race.  If  cotton  be  king,  he  is,  thank 
God,  enthroned  in  the  United  States;  if  bread  be  king, 
where  should  his  capital  be  but  in  this  great  valle}^  of 
the  Mississippi  ?  This  nation  has  within  itself  every- 
thing that  is  needed  to  make  it  the  greatest  among  the 
family  of  nations.  Coal  and  iron  in  juxtaposition  and 
inexeaustible  supply;  mountains  and  valleys  rich  enough 
in  gold  and  silver  to  furnish  the  world,  for  all  time,  with 
what  ma}'  be  needed  for  circulation  and  other  uses;  cop- 
per and  lead  and  other  minerals  in  no  less  abundance ;  a 
soil  of  wonderful  fertilit}^;  a  climate  salubrious  and  di- 
versified, and,  above  all,  republican  institutions,  and  an 
energetic  and  again  united  people. 

We  have,  it  is  true,  sir,  difficult  questions  growing  out 
of  the  war  yet  to  be  settled,  but  I  have  an  abiding  con- 
fidence that  they  will  be  settled,  as  they  come  up  for 
settlement,  in  such  manner  as  will  strengthen  the  Union 
and  add  to  our  national  renown.  The  labor  question  at 
the  South  is  one  of  those  questions,  but  if  there  be  no 
outside  interference,  it  will  not,  I  apprehend,  be  a  very 
difficult  one;  on  the  contrary,  it  is  quite  likely  to  be  a 
self-adjusting  one.  The  planter  wants  the  labor  of  his 
former  slaves,  and  the  high  price  which  Southern  pro- 
ducts will  command  for  years  to  come  will  enable  him 
to  pay  liberalh^  for  it.  The  colored  people  will  soon 
learn  that  freedom  from  slaver}^  does  not  mean  freedom 
from  work.  The  interests  of  the  two  races  will  not  long 
be  antagonistic.  The  whites  will  need  the  labor  of  the 
blacks,  and  the  blacks  will  need  emplo^'ment.  There 
is  as  much  danger  to  be  apprehended  from  the  unwilling- 
ness of  the  latter  to  labor  for  a  support  as  from  an  in- 
disposition on  the  part  of  the  former  to  pay  fair  wages. 


53 

Like  all  other  economical  questions,  it  will  be  settled  by 
the  necessities  and  interests  of  the  parties. 

Fortunately  for  the  solution  of  this  question  and  the 
well-being  of  laboring  men  generally,  capital  is  not  su- 
preme in  the  United  States.  It  does  not,  as  in  most 
other  countries,  hold  labor  under  its  control  and  dole 
out  to  it  only  such  remuneration  as  will  make  it  most 
productive.  Labor  is  a  power  in  this  free  country,  with 
its  cheap  lands,  which  are  within  the  reach  of  all  in- 
dustrious men,  and  dictates  terms  to  capital.  There  is 
no  part  of  the  world  where  labor  is  more  needed  than 
in  the  Southern  States,  nor  where  it  will  soon  command 
better  prices.  This  labor  question  at  the  South  will,  I 
doubt  not,  be  satisfactorily  arranged  in  due  time  for  the 
best  interests  of  all  concerned. 

But  I  have  trespassed  too  long  upon  your  time.  Ac- 
cept, again,  my  thanks  for  your  courtesy,  and  for  the 
attention  you  have  given  to  my  desultory  remarks. 


Note — The  predictions  in  this  address  of  the  disasters  which 
would  result  from  continued  issues  of  irredeemable  Govern- 
ment notes,  and  of  the  recuperative  power  of  the  country,  were 
fully  verified  by  the  terrible  financial  crisis  of  1873  and  by  the 
prosperity  which  followed. 


SPEECH 

DELIVERED  AT  THE 

ANNUAL  MEETING  OF  THE  COBDEN  CLUB, 
London,  Junk  24,   187 1. 


Spee:;CH 

DELIVERED  AT  THE 

ANNUAL  MEETING  OF  THE  COBDEN  CLUB, 
London,  June  24  1871. 


My  Lord,  My  Lords,  and  Gentlemen :  Until  I 
came  to  England  last  autumn,  I  had  lived  in  a  republi- 
can country,  under  republican  institutions;  for  a  con- 
siderable period  on  a  frontier,  wlie^e  every  man  was  a 
law  unto  himself,  where  law-makers,  and  law-execu- 
tors— the  necessary  agents  or  adjuncts  of  what  is  called 
a  "higher  civilization" — were  practically,  if  not  alto- 
gether, unknown.  For  the  last  seven  months  I  have 
been  living  in  London,  and  I  had  about  come  to  the  con- 
clusion that  I  had  sacrificed  very  little  of  personal  free- 
dom in  coming  to  a  country  under  a  monarchial  form  of 
government — that  "I  was  about  as  free  here  as  I  had 
been  at  home.  Indeed,  I  had  availed  myself  of  every 
proper  opportunity  to  say  to  my  friends  on  the  other 
side  of  the  Atlantic  that  England  was,  in  fact,  a  free 
country  [cheers  and  laughter] ;  that  it  seemed  to  me 
that  the  English  people  were  in  the  enjoyment  of  as 
much  liberty  as  my  own  countrymen.  Being  in  this 
happy  frame  of  mind  in  regard  to  the  Mother  Country, 
you  may  judge  of  my  surprise  and  dismay  when  I  re- 
ceived yesterday  morning  the  following  note  : 

IvANGHAM,  June  2 1  si. 
DEAR    Mr.  McCulloch:    You  will  have  to  respond  as   an 
American  for  the  foreigners  on  the  24th. 

Yours,  truly,  T.  B.  PoTTER. 

[Great  laughter.]     Could  anything  be  more  laconic  or 
mandatory  ?     Not  ' '  Will  you  be  so  good  as  to  respond  ? ' ' 


58 

or  "You  will  oblige  us  by  responding;  "  but  "  Yoii 
will  have  to  respond" — not  only  as  an  American  for 
Americans,  but  as  an  American  for  foreigners,  as  if  an 
American  in  England  were  a  foreigner.  [Laughter.] 
Here,  in  what  I  had  fondly  supposed  was  a  free  country, 
I  am  called  upon  in  the  most  arbitrar}-  manner  to  do  not 
only  what  under  any  circumstances  I  might  be  unwill- 
ing to  do,  but  what,  in  the  present  circumstances,  I  am 
quite  unprepared  to  do.  [Cries  of  "No,  no."]  Bear 
in  mind,  also,  that  this  note  was  not  written  by  the 
Queen,  nor  by  a  prince,  nor  a  lord,  but  by  a  member  of  the 
House  of  Commons— the  popular  branch  of  the  English 
Government — by  the  secretary  of  a  club  organized  in 
commemoration  of  a  great  popular  leader.  "  If  such 
things  can  be  done  in  the  green  tree  what  may  not  be 
done  in  the  dry  ?  "  [Laughter.]  If  such  liberties  can 
be  taken,  or  rather,  if  a  man  can  thus  be  deprived  of 
his  liberty  by  a  Liberal,  what,  in  the  name  of  human 
rights,  may  not  be  apprehended  from  a  Conservative  ? 
[Great  laughter.]  I  am  in  a  strait.  It  may  be  dan- 
gerous for  me  to  disobey  absolutel}^  the  mandate  of  one 
who  speaks  as  if  clothed  with  authority,  backed,  as  to 
my  surprise  he  is,  by  the  distinguished  Lord  Acton; 
and  yet  I  am  clear  that  I  ought  not  to  inflict  a  poor 
speech  upon  so  agreeable  and  intelligent  an  audience. 
There  is  one  thing,  however,  I  can  do,  or  rather  there 
is  one  thing  I  can  stop  doing — I  can  stop  calling  this  a 
free  country,  and  that  I  am  resolved  upon.  No  one 
shall  ever  hear  me  say  one  word  more  in  praise  of  En- 
glish liberty.  With  this  note  in  ni}-  pocket  (and  I  shall 
carefully  preserve  it)  I  shall  bear  with  me  the  most  con- 
clusive evidence  that  personal  liberty  in  England  is  a 
myth  and  a  delusion.      [Great  laughter.] 

My  lord,  your  great  poet — but  why  should  I  call  him 
\'Our  great  poet,  a  great  poet  is  the  world's  propert}^ — 
our  great  poet,  the  world's  great  poet,  has  said  that 
"  the  evil  which  men  do  lives  after  them,  while  the  good 
is  oft  interred  with  their  bones."  If  the  immortal 
dramatist  meant  by  this  remark,  which  he  puts  into  the 
mouth  of  Mark  Anthony-,  that  the  evil  which  men  do 
is  more  lasting  than  the  good,  he  was  undoubtedly  mis- 
taken; if  he  were  not,  the  world  would  be  retrograd- 


6^ 

ing  in  goodness,  which  I  apprehend  is  not  the  fact. 
Bad  as  the  world  may  be,  full  of  suffering  as  it  unques- 
tionably is,  it  is  nevertheless  improving.  The  world  to- 
day is  better  than  it  ever  was  before.  There  is  at  the 
present  time  more  of  kindness  and  fraternity,  more  of 
active  humanity,  more  of  what  may  be  denominated 
Christian  civilization,  than  there  has  been  at  any  period 
of  the  world's  history.  ["Hear,  hear."]  The  good  which 
men  do  lives  after  them;  like  good  seed  sown  upon 
good  ground,  it  fails  not  in  due  time  to  bring  forth  its 
legitimate  fruit.  Of  few  men  can  it  be  said  more  truth- 
fully that  the  good  which  they  have  done  lives  after 
them  than  of  Richard  Cobden.  [Cheers.]  His  acute 
intellect,  his  sound  jugment  and  accurate  observation 
enabled  him  to  discover  what  was  true  in  the  science  of 
political  economy,  of  which  he  was  both  student  and 
teacher;  and  having  discovered  it,  there  was  no  power 
on  earth  that  could  prevent  him  from  advocating  it;  a  lover 
of  peace,  he  was  the  earnest,  unflinching  and,  in  his  own 
country,  the  triumphant  advocate  of  the  system  of  free 
trade,  or  free  exchanges,  between  nations,  which  tends 
to  bind  them  together  by  the  strong  ties  of  mutual  in- 
terests [cheers] ;  a  sincere  lover  of  his  kind,  ir- 
respective of  nationalities  or  conditions,  he  was  ever 
the  champion  of  human  rights  in  the  most  comprehen- 
sive meaning  of  the  term  [cheers] ;  loving  England 
more  than  any  other  country,  and  the  English  people 
more  than  any  other  people,  as  it  was  proper  for  him  to 
do,  his  sympathies  for  his  fellow-men  were  too  broad 
and  too  generous  to  be  limited  by  national  boundaries 
[cheers];  he  was,  in  fact,  a  citizen  of  the  world,  and  the 
world  claims  a  heritage  in  his  fame  and  in  the  results 
of  his  labors.  I  am  sure  I  do  but  express  the  sentiments 
of  all  the  foreigners  present  when  I  say  that  they 
heartily  indorse  the  eloquent  eulogium  which  the  noble 
chairman  has  pronounced  upon  his  character.  [Cheers.] 
The  good  which  he  did  lives  after  him,  the  first  fruits 
of  his  labors  are  now  being  enjoyed,  and  I  am  greatl}' 
mistaken  in  my  expectations  if  a  richer  harvest  is  not 
yet  to  be  realized  by  the  nations.  ["Hear,  hear,"  and 
cheers.] 

In  regard   to  the  recent  treaty  which  has  been  made 


60 


between  Great  Britain  and  the  United  States,  it  may  be 
proper  for  me  to  say  that  although  I  have  believed  that 
there  was  less  danger  than  many  had  apprehended  of 
war  between  the  two  nations;  although  I  have  had  faith 
that  there  was  a  feeling  of  friendship  at  the  bottom, 
which,  in  spite  of  our  jealousies  and  controversies,  would 
prevent  actual  hostilities,  I  have  nevertheless  regarded 
it  as  very  important  for  the  welfare  of  both  nations  that 
all  irritating  and  uncomfortable  questions  which  were 
preventing  good  fellowship  between  them  should  be  set- 
tled. While  there  may  be — and  it  would  be  strange  if 
there  were  not — some  honest  differences  of  opinion  on 
both  sides  in  regard  to  the  merits  of  this  treaty,  I  am 
satisfied  that  among  right-feeling  men  there  is  a  senti- 
ment of  sincere  gratification  that  all  causes  of  difference 
between  nations  so  closely  related  to  each  other  are  re- 
moved; and  I  have  no  doubt  that  I  am  expressing  the 
opinion  of  an  overwhelming  majority  of  my  own  people 
as  well  as  the  people  of  Great  Britain  when  I  say  that 
the  treaty  is  entirely  honorable  to  both  nations,  and  in 
the  highest  degree  creditable  to  the  very  distinguished 
gentlemen  whose  names  are  connected  with  it.  [Great 
cheering.]  In  conclusion,  permit  me,  therefore,  to  propose 
the  health  of  the  Marquis  of  Ripon,  with  the  single  re- 
mark that  no  honor  which  Her  Majesty  has  conferred 
or  may  confer  upon  him  can  equal  the  reputation  so  fairly 
won  by  the  obligation  under  which  he  has  laid  the  peo- 
ple of  both  nations,  by  his  agency  in  binding  them  to- 
gether in  amity  which  can  hardly  fail  to  be  perpetual. 
[Great  cheering.] 


SPEECH 

DELIVERED  AT  A 

THANKSGIVING   BANQUET    GIVEN    BY   CYRUS 
W.  FIELD,  AT  THE  PALACE  HOTEL, 

London,  November  28,  1872. 


SPEECH 

DELIVERED  AT  A 


THANKvSGIYING   BANQUET   GIVEN    BY  CYRUS 
W.  FIELD,  AT  THE  PALACE    HOTEL, 

London,  Novkmbkr  28,  1872. 


Mr.  Field  and  Gentlemen  :  In  the  United  States, 
or  at  least  in  New  England,  when  I  was  a  boy,  we  had 
but  two  holidays.  The  Pilgrim  fathers,  as  we  were  in 
the  habit  of  calling  them,  considered  all  observances  of 
saints'  days  and  days  that  savored  of  Masses  as  having 
l)een  instituted  by  the  prince  of  darkness;  and  as  they 
had  the  control  of  such  matters,  very  little  was  done  in 
the  direction  of  holidays.  We  had,  it  is  true,  a  day 
which  was  sometimes  called  a  holiday,  but  which  should 
more  properly  have  been  called  a  holy  day,  an  annual 
fast  day.  But  as  this  was  a  day  of  long  sermons  and 
short  commons,  its  return  was  never  hailed  with  much 
satisfaction  by  that  large  class  in  the  community  who 
had  good  appetites  and  little  faith  in  the  mortification  of 
the  flesh  as  a  means  of  propitiating  the  Deity  and  se- 
curing good  crops.  [Laughter.  I  We  had,  therefore, 
Init  two  holidays,  the  Fourth  of  July  and  Thanksgiving 
Day.  The  Fourth,  as  you  well  know,  was  rather  a  politi- 
cal than  a  social  holiday.  It  was  a  day  on  which 
everybody  was  expected  to  be  especially  patriotic,  on 
which  the  younger  portion  of  the  community  were  in 
the  habit  of  burning  powder  freely,  no  matter  how  hot 
might  be  the  weather,  and  of  singing  hosannas  to  the 
goddess  of  liberty,  by  whose  intervention  it  was  sup- 
posed the  American  eagle  had  escaped  the  clutches  of 
the  British  lion.      [Laughter.]     But  the  day  of  days,  the 


64 

day  of  short  sermons  and  good  dinners,  the  day  of 
family  reunions,  the  day  of  universal  good  feeling,  the 
day,  I  am  happy  to  say,  on  which  every  board,  however 
humble  it  might  be,  was  generously  supplied  with  the 
good  things  which  the  country  so  abundantly  produced, 
was  Thanksgiving  Day.  It  was  a  day  which  all.  New 
Englanders  especially,  remember  with  the  liveliest  affec- 
tion, and  we  feel  greatly  indebted  to  Mr.  Field  that  we 
are  permitted  to  enjoy  it  together  in  this  place.  This 
celebration  will  add  a  new  charm  to  the  day  of  which 
we  always  have  the  most  pleasant  recollections.  I  may 
say,  further,  that  it  is  a  day  in  the  celebration  of  which 
Englishmen  can  heartily  join  with  Americans,  for  you 
recollect  that  the  Thanksgiving  Day  of  the  Pilgrims 
was  an  English  institution.  It  was  ordained  by  En- 
glishmen— on  American  soil,  it  is  true,  but  by  English- 
men thoroughly  loyal  to  the  English  throne,  and  as 
thoroughly  imbued  Avith  that  spirit  of  civil  and  religious 
liberty  which,  although  it  has  been  subject  to  temporary 
obscurations,  is  the  very  foundation  of  the  ecclesiastical 
and  political  institutions  of  this  great  country.  [Cheers.  ] 
The  day  is  a  pleasant  one  in  another  respect,  and  En- 
glishmen and  Americans  can  join  in  the  celebration,  es- 
pecially at  the  present  time,  because  there  never  has 
been  a  period  when  such  agencies  were  at  work  to  es- 
tablish good  relations  between  the  two  countries.  The 
influences  of  a  common  ancestry,  of  a  common  litera- 
ture, of  a  common  language,  and,  to  a  considerable  ex- 
tent, a  common  law,  and  a  mutually  profitable  trade, 
have  of  late  been  vastly  strengthened  by  the  increased 
facilities  of  intercourse  and  communication. 

It  is  a  trite  remark,  but  a  true  one,  that  steam  and 
electricity  have  annihilated  distance.  Steamships  are 
bringing  every  year  from  the  United  States  to  this  coun- 
try thousands  of  Americans,  very  few  of  whom  would 
have  thought  of  crossing  the  Atlantic  had  it  not  been  for 
steamships;  most  of  whom — all  of  whom,  I  may  say — 
return  with  increased  respect  and  increased  affection  for 
the  Mother  Countrv.  A  large,  though  smaller, number  of 
English  people  are  constantly  visiting  the  United  States, 
and  are  as  constantly  returning  with  similar  sentiments  in 
regard   to  the  great  Republic.      [Cheers.]     Not  only  so, 


65 


but  these  two  nations,  so  strongly  united  as  they  are, 
and  still  more  strongly  united  as  they  are  destined  to  be — 
these  two  nations,  thanks  to  our  honorable  chairman,  to 
whose  energy  and  faith  we  are,  in  my  judgment,  in- 
debted for  the  Atlantic  cable  [cheers],  can  now,  as  it 
were,  speak  face  to  face;  and  I  have  no  question  that 
the  eloquent  words  uttered  by  the  right  honorable  gen- 
tleman [Mr.  O-ladstone]  who  has  just  sat  down  have  ere 
this  been  flashed  to  the  United  States,  and  that  before 
the  sun  hides  his  face  in  the  Pacific  Ocean  they  will 
have  been  read  with  delight  from  one  end  of  the  country 
to  the  other.  This  is  a  time  also  of  peculiar  interest, 
because  we  have  at  last  reached  a  point  at  which  all 
differences  between  the  two  nations  have  been  definitely 
and  honorably  settled.  [Cheers.]  The  right  honorable 
gentleman  who  has  spoken  with  so  much  eloquence — I 
verily  believe  he  could  not  help  being  eloquent  if  he 
tried — when  the  Alabama  or  Washington  treat}'  was 
somewhat  more  unpopular  than  it  now  is,  certainly  more 
unpopular  than  it  is  likely  hereafter  to  be,  assumed  the 
full  responsibility  of  it.  The  right  honorable  gentleman 
has  acquired  a  reputation  which  has  placed  him  in  the 
front  rank  of  the  most  distinguished  of  his  countrymen; 
but  I  incline  to  the  opinion  that,  brilliant  as  his  career 
has  been,  there  is  no  part  of  it  that  he  will  reflect  upon 
with  more  satisfaction  than  upon  his  connection  with  this 
treaty.  It  will  be  the  most  lasting  and  the  most  honor- 
able monument  to  his  fame.  In  regard  to  the  treat}^  it- 
self I  have  very  little  to  say.  It  is  well  understood;  it 
has  been  read,  at  all  events,  b}-  all  who  care  for  the  re- 
lations between  the  two  countries;  it  tells  its  own  story; 
it  is  a  simple  agreement  between  two  great  nations  to 
adjust  their  controversies  by  arbitration  instead  of  the 
sword;  it  settles  most  important  principles  of  interna- 
tional law;  it  defines  clearly  the  duties  and  responsibil- 
ities of  neutrals.  In  my  judgment,  and  almost  in  the 
language  of  Mr.  Field,  it  is  the  greatest  achievement  of 
Christian  civili/^ation  during  the  present  century.  [Loud 
cheers.] 


LETXBR 

TO 

MERCHANTS   OF   CINCINNATI. 


♦  LETTER 

TO 

MERCHANTS   OF   CINCINNATI. 


Plainfield,  N.  J.,  August  17,  1874. 

Gentlemen:  Your  kind  letter  of  the  25th  ult.  was 
received  at  Fort  Wayne  after  I  had  left.  I  regret  that 
other  engagements  prevent  me  from  accepting  your  flat- 
tering invitation  to  meet  my  fellow-citizens  of  Cincin- 
nati, with  many  of  whom  I  was  formerly  connected  by 
business  and  social  ties,  and  to  speak  to  them  upon  the 
interesting  and  what  you  term  "perplexing"  subjects 
of  finance  and  taxation. 

I  am  in  no  sense  a  teacher.  M}-  opinions  upon  these 
subjects  are  valuable  only  as  the  opinions  of  one  who 
has  given  to  them  some  thought,  and  who  has  been  in- 
fluenced in  his  conclusions  neither  by  personal  nor  po- 
litical (party)  considerations.  As,  however,  you  desire 
an  expression  of  them,  and  as  I  now  find  this  cannot  be 
given  in  the  manner  proposed,  I  do  not  hesitate  to  ex- 
press them  in  this  manner. 

It  will  be  sufficient  for  my  purpose  to  consider  that 
you  especially  refer  b}^  "Finance"  to  the  currency  and 
by  "Taxation"  to  the  tariflf,  although  this  is  but  a  limited 
view  of  the  terms.  For  want  of  time  I  shall  only  be 
able  to  express  the  conclusions  I  have  reached  without 
undertaking  to  give  the  facts  or  the  arguments  upon 
which  they  are  based. 

THE  CURRENCY. 

My  opinions  upon  the  subject  of  the  currency  are  well 
known  by  those  who  took  the  trouble  to  read  my  Fort 
Wayne   speech   and   my  reports   as   Secretary   of    the 


'0 


i'reasury  from  1865  to  1869.  The  opinions  I  then  ex- 
pressed, in  language  as  strong  and  unequivocal  as  I 
could  command,  have  neither  been  changed  nor  modi- 
fied. On  the  contrary,  they  have  been  confirmed  and 
strengthened  by  further  observation  and  reflection.  I 
thought  it  to  be  the  duty  of  Congress,  considering  the 
subject  in  its  moral  as  well  as  its  financial  bearings,  to 
adopt  decisive  and  efi^ective  measures  to  bring  about 
specie  payments,  and  that  the  time  for  the  adoption  of 
these  measures  was  at  the  close  of  the  war.  I  did  not 
think  that  "the  way  to  prepare  for  specie  payments  was 
to  resume,"  but  I  did  think  it  of  vital  importance  to  the 
best  interests  of  the  country  that  the  restoration  of  the 
specie  standard  should  be  the  end  and  aim  of  all  legis- 
lation bearing  upon  the  subject  of  the  currency. 

My  conviction  was  clear  and  decided  that  this  could 
only  be  effected  within  au}^  reasonable  time,  and  before 
such  financial  disaster  as  has  recently  occurred  would 
overwhelm  the  country,  by  retiring  so  much  of  the  paper 
currency  in  circulation  as  would  be  necessary  to  bring 
up  the  residue  to  par.  I  thought  that  this  could  be  ac- 
complished without  the  occurrence  of  the  apprehended 
disaster  to  the  business  of  the  country,  and  without  af- 
fecting in  the  least  the  real  value  of  property;  that  by 
a  curtailment  of  the  amount  of  inconvertible  notes  in 
circulation  the  purchasing  or  measuring  power  of  the 
remainder  would  be  proportionately  increased,  and  that, 
consequently,  the  amount  of  real  money  in  circulation 
would  not  be  thereby  diminished;  that  measuring  prop- 
erty by  a  false  standard  could  not  add  to  its  value,  nor 
by  a  true  standard  reduce  it. 

There  was,  it  seemed  to  me,  but  one  class  in  the  com- 
munity— the  debtor  class — who  could  be  benefited  by  a 
depreciated  currency,  and  I  was  anxious  that  decided 
action  for  relieving  the  country  of  such  a  currency  should 
be  taken  immediately  after  the  close  of  the  war,  when 
individual  indebtedness  was  less  than  it  had  been  for 
many  years.  It  seemed  to  me,  also,  that  the  injury  to 
this  class  of  our  fellow-citizens,  from  a  reduction  and 
consequent  improvement  of  the  currency,  would  be  al- 
together less  than  was  feared  by  them;  that  what  honest 
and  energetic  debtors  needed  was  not  legislation  to  en- 


71 

able  them  to  pay  their  debts  in  a  depreciated  currency, 
but  legislation  that  would  give  activity  to  well-directed, 
not  speculative,  enterprise  and  stability  to  business; 
that  as,  in  fact,  one  debt  is  in  the  course  of  trade  usually 
paid  by  the  creation  of  another,  and  the  general  indebt- 
edness of  the  people  is  not  ordinarily  from  year  to  year 
materially  reduced ,  the  debtor  class  itself  was  in  no  serious 
danger  of  being  injured  by  the  elevation  of  the  standard 
of  values,  and  that  if  they  were  to  be  injured  by  it,  the 
injury  to  them  would  be  small  in  comparison  with  that 
which  had  been  inflicted  upon  creditors  by  the  legal- 
tender  acts,  which  compelled  them  to  receive  in  satis- 
faction of  existing  contracts  a  currency  of  far  less  value 
than  that  which  was  the  only  lawful  money  at  the  time 
they  w^ere  made,  and  who  generally  bore  their  losses 
without  murmuring,  as  a  sacrifice  required  by  the  Gov- 
ernment in  its  struggles  with  a  gigantic  rebellion. 

In  language  which  made  up  by  explicitness  what  it 
lacked  in  strength,  I  pointed  out  the  danger  and  the  im- 
moral influences  of  an  inconvertible  and  depreciated 
currency.  By  every  argument  I  could  make,  and  every 
illustration  I  could  bring  to  bear  upon  the  subject,  I  en- 
deavored to  prove,  in  each  of  my  reports,  that  a  depre- 
ciated currency  was,  and  never  could  be  anything  else, 
than  a  positive,  unmistakable  injury  to  the  people, 
morally  and  financially;  that  in  regard  to  such  a  currency 
there  could  be  no  "  stand  still  until  the  country  grows 
up  to  it"  policy;  that  by  wise  legislation  we  should 
move  toward  specie  payments,  or  by  unwise  legislation 
or  by  floating  without  chart  or  compass  we  should  find 
ourselves  upon  financial  breakers  before  we  were  con- 
scious of  immediate  danger. 

In  my  earliest  utterances  upon  the  financial  question, 
in  a  free  talk  with  my  Fort  Wayne  friends,  I  remarked 
that  "while  I  regarded  an  exclusive  metal  currency 
among  an  enterprising  and  commercial  people  as  an  im- 
practicable thing,  I  regarded  an  irredeemable  paper  cur- 
rency as  an  evil  which  circumstances  for  a  season 
might  render  a  necessity,  but  which  should  never  be 
sustained  as  a  policy;  that  the  legal-tender  notes  were 
issued  as  a  war  measure,  and  that  as  the  war  had  been 
brought  to  a  successful  termination,  measures  should  be 


instituted  for  retiring  them  together,  or  bringing  them 
up  to  the  specie  standard;  that  I  had  no  faith  in  a  pros- 
perity that  was  based  upon  a  depreciated  paper  money, 
and  that  I  saw  no  safe  path  to  thread  but  that  which  led 
to  specie  payments;  that  the  extremely  high  prices  pre- 
vailing in  the  United  States  were  an  unerring  indication 
that  we  were  measuring  property  b}^  a  false  standard; 
that  the  United  States  were  becoming  the  best  country 
in  the  world  for  foreigners  to  sell  in  and  the  worst  to  buy 
in;  that  the  longer  inflation  continued  the  more  difficult 
would  it  be  to  get  back  to  the  solid  ground  of  specie 
payments;  that  if  Congress  should  earl\'  in  the  approach- 
ing season  (1865  and  1866)  authorize  the  funding  of  the 
legal-tender  notes,  and  the  work  of  reduction  should  be 
commenced  and  carried  on  resoluteh^  but  carefully  and 
prudently,  we  should  reach  the  solid  ground  without 
serious  embarrassment  to  legitimate  business.  If  not, 
we  shall  have  a  brief  period  of  hollow  and  seductive 
prosperity,  resulting  in  widespread  bankruptcy  and  dis- 
aster." Such  were  my  sentiments  then,  and  such  are 
they  now. 

The  truth  is,  gentlemen,  and  the  reiteration  of  it  ought 
not  to  be  necessary,  gold  and  silver  are  the  only  stand- 
ards of  value;  and  as  long  as  we  are  a  part  of  the  great 
famih'  of  nations,  and  are  a  commercial  people,  we  can 
adopt  no  inferior  standard  without  being  greatly  the 
losers  by  it. 

A  sound  currency  is  the  very  life-blood  of  a  commer- 
cial people.  None  but  bankrupt  nations,  with  the  ex- 
ception of  the  United  States,  keep  in  circulation  an 
irredeemable  paper  currency,  a  currenc}^  which  in  their 
cases  tends  to  produce  and  perpetuate  the  povert\'  it  in- 
dicates. To  the  United  States  such  a  currenc}'  is 
utterly  disreputable,  since  there  is  not  the  slightest 
necessit}'  for  it.  That  a  nation  so  rich  as  ours,  so  grand 
in  its  resources,  so  vast  in  its  productions,  a  nation 
which  has  challenged  the  admiration  of  the  civilized 
world  by  the  rapid  reduction  of  its  public  debt,  com- 
mencing that  reduction  at  the  close  of  a  war  the  most 
expensive  that  has  ever  been  carried  on  and  actually 
reducing  it  at  the  rate  of  nearly  a  hundred  million  of 
dollars  a  year,  that  such   a  nation  should  for  so  long  a 


n 


period  maintain  a  depreciated  circulating  medium,  made 
lawful  money  by  statute,  is  to  intelligent  foreigners  an 
inexplicable  mystery.  The  specie  standard  ought  to 
have  been  restored  ere  now,  and  I  believe  it  would  have 
been  if  that  great  power  in  the  land,  the  press,  had  given 
to  the  doctrines  enunciated  from  the  Treasury  Depart- 
ment from  1865  to  1869  the  hearty  indorsement  it  has 
given  to  similar  doctrines  when  proclaimed  by  the  Presi- 
dent in  1874. 

If  the  financial  trouble  that  has  come  upon  us,  and 
the  consequent  prostration  of  business  in  nearly  all 
branches  of  trade,  notwithstanding  the  plentifulness  of 
currency,  shall  tend  to  correct  the  public  sentiment  in 
regard  to  the  nature  and  offices  of  money,  they  will  not 
be  entirely  without  compensation.  It  required  the 
sacrifices  of  a  great  war  to  uproot  slavery;  perhaps  it 
required  the  experience  of  a  great  financial  disaster  to 
teach  the  people  the  danger  of  discarding  the  true  meas- 
ure of  value,  and  substituting  therefor  the  uncertain, 
fluctuating  standard  of  irredeemable  legal-tender  notes. 
It  will  be  lamentable  indeed  if.  instead  of  being  profited 
by  experience,  our  financial  trouble — the  result  in  a 
great  measure  of  our  financial  mistakes — shall  cause  a 
still  wider  departure  from  the  paths  of  wisdom  and  safety. 

Real  money — and  the  world  always  has  had  and  will 
have  plenty  of  it  for  legitimate  uses — leaves  or  avoids 
countries  that  have  an  inferior  substitute  for  it.  But  no 
matter  what  other  standard  may  be  adopted  by  law,  or 
how  the  fact  may  be  attempted  to  be  disguised,  the 
value  of  all  property  is  still  regulated  by  it.  The  legal- 
tender  act  compels  the  people  of  the  United  States  to 
treat  the  greenback  dollar  as  if  it  were  a  dollar  in  fact; 
but  except  in  payment  of  debts  it  is  not  one;  it  has  not 
the  purchasing  power  of  one.  Its  value  has  been  forty- 
five  cents;  it  is  nov*'  ninety.  A  year  hence  it  may  be 
ninety-five,  or  it  may  be — no  man  can  tell  what.  It 
is  the  paper  and  not  the  gold  dollar  that  fluctuates,  and 
is,  therefore,  an  uncertain  and  dangerous  standard.  Can 
it,  then,  be  doubted  that  it  is  the  duty  of  Congress  so  to 
legislate  as  to  make  as  soon  as  practicable  the  paper 
dollar,  of  which  it  authorizes  the  issue,  equal  to  the 
gold  one? 


74 


The  question  then  arises,  What  legislation  is  required 
to  effect  this  most  desirable  result  ? 

Our  new  Secretary  is  a  gentleman  of  ability,  and  he 
belongs  to  a  State  in  which  good  financial  seed  was 
sown  at  an  early  day,  as  has  been  proved  by  her  high 
financial  credit  and  tlie  soundness  of  her  banking  insti- 
tutions. I  know  not  what  his  views  are,  but  he  would 
not  be  a  true  scion  of  Kentucky  stock  if  he  were  un- 
sound upon  the  financial  question.  If  the  management 
of  our  finances  were  in  his  hands,  I  for  one  should  be 
willing  to  take  him  upon  trust,  not  doubting  that  he 
would  pursue  the  right  course  to  relieve  the  country 
from  the  burden — for  such  it  is — of  an  irredeemable  cur- 
rency. 

But  such  is  not  the  fact.  His  hands  are  tied.  Con- 
gress is  to  determine  what  shall  be  our  financial  policy, 
and  this  determination  may  depend  upon  the  result  of 
the  approaching  elections. 

As  parties  now  stand  the  financial  question  cannot  be 
made  a  strictly  party  question;  nor  will  it  be,  as  at  the 
latter  part  of  the  late  session  it  w^as  feared  might  be  the 
case,  a  sectional  one.  It  is  a  question  upon  which  there 
will  be  a  difference  of  opinion  among  men  of  the  same 
party  and  the  same  State.  That  there  should  be  speedy 
legislation  and  a  definite  policy  established  everybod}- 
who  is  not  a  gambler  in  business  admits  and  desires. 
Nothing  but  further  inflation  can  be  worse  than  uncer- 
tainty upon  a  matter  so  important  to  the  well-being  of 
the  country  as  the  currency.  It  is  for  these  reasons  that 
I  feel  at  liberty  to  give  my  opinion  upon  the  financial 
legislation  that  is  required.  I  state  my  views  frankly, 
not  as  presenting  the  only  way,  but  as  what  seems  tome 
the  most  certain  and  direct  way  of  returning  to  specie 
payments.  If  a  wiser  plan  shall  be  adopted  no  one  will 
be  more  pleased  than  myself. 

First.  Congress  should  fix  a  period,  say  the  ist  of 
December,  1876 — the  time  is  not  material,  if  it  be  not 
remote — after  which  United  States  notes  should  cease 
to  be  legal  tender. 

Second.  The  Secretary  of  the  Treasury  should  be 
authorized  to  retire  by  the  use  of  the  surplus  revenue 
and,  if  this  should  be  insufficient,  by  the  sale  of  bonds, 


75 


at  least  ;$5o, 000,000  of  United  States  notes  per  annum 
until  all  have  been  retired,  and  he  should  be  prohibited 
from  re-issuing  the  notes  thus  retired  under  any  pretext 
or  circumstances  whatever. 

Third.  In  lieu  of  the  United  States  notes  retired,  an 
equal  amount  of  bank-notes,  if  they  should  be  required, 
should  be  issued  to  national  banks. 

Fourth.  When  the  specie  standard  has  been  re-estab- 
lished by  the  repeal  of  the  legal-tender  acts,  banking 
should  be  made  free  and  Congress  should  cease  to  inter- 
fere with  the  currency,  except  so  far  as  may  be  neces- 
sary to  prevent  illegal  issues  and  to  provide  that  every 
dollar  in  circulation  by  authority  of  law  shall  be  secured 
bevond  a  contingency,  as  is  now  the  case,  by  a  deposit 
of  United  States  bonds  in  the  Treasury. 

It  is  obvious  that  as  long  as  the  United  States  notes  are 
a  legal  tender  the  specie  standard  is  not  likely  to  be  re- 
stored. These  notes  should  be  gradually  retired,  because 
until  the  volume  is  reduced  they  will  not  permanently 
improve  in  value,  and  because  until  the  banks  perceive 
that  the  reduction  is  actually  taking  place  they  will 
make  no  effort  to  supply  themselves  with  coin  for  the  pro- 
tection of  their  own  circulation.  It  is  not  likely  that  an 
issue  of  bank-notes  corresponding  to  the  amount  of  the 
United  States  notes  withdrawn  will  be  required,  as  the 
value  of  both  kinds  of  our  paper  money  will  be  steadily 
increasing,  and  specie  will  be  taking  the  place  of  paper 
as  a  reserve  of  the  banks  and  ultimately  as  a  circulation 
among  the  people.  This  will  be  a  self-regulating  matter. 
As  the  United  States  notes  are  retired  the  banks  will 
fortify  themselves  with  coin,  so  that  when  the  time  of 
coin  redemption  comes  round  thev  will  be  prepared  to 
meet  the  calls  which  may  be  made  upon  them,  which 
will  not  be  large,  as  the  preparation  for  this  state  of  things 
will  have  brought  the  business  of  the  country  into  a 
healthy  condition,  and  there  will  be  little  demand  for 
coin  for  exportation. 

Nor  will  this  withdrawal  of  United  States  notes  pre- 
paratory to  a  return  to  specie  payments,  nor  the  return 
itself,  affect  the  value  of  property  or  disturb  business. 
Some  intelligent  men,  who  are  anxious  to  stand  again 
upon  solid  ground,  are  apt  to  speak  of  the  "shrinkage" 


16 

which  must  occur  before  this  can  be  brought  about,  not 
reflecting  that  the  real  vahie  of  propert}^  is  not  affected 
by  the  standard  by  which  it  is  estimated.  Property  is 
not  dependent  for  its  vaUie  upon  a  fiction.  We  speak 
of  the  price  of  gold,  of  its  rise  and  fall,  and  some  of  us 
seem  to  think  that  we  are  richer  as  it  rises  and  poorer 
as  it  falls;  while  its  real  value  is  permanent  except  so 
far  as  it  is  affected  by  the  yield  of  the  mines.  In  spite 
of  the  legal- tender  acts  it  is  to-day,  and  it  must  continue 
to  be,  the  real  measuring  standard  of  property.  There 
is  no  foundation,  therefore,  for  the  apprehension  of  a 
shrinkage  in  the  value  of  property  as  a  consequence  of 
a  return  to  specie  payments,  nor  is  there  any  more  foun- 
dation for  the  apprehension  that  such  a  change  in  our 
financial  policy  will  make  money  scarcer  and  times 
harder.  As  I  have  alread}^  said,  money,  whether  it  be 
gold  or  paper,  goes  where  it  is  wanted. 

The  advocates  in  Congress  of  inflation  or  an  increase 
of  currency  were  chiefly  from  the  Western  States.  How 
truly  they  reflected  the  sentiments  of  that  section  I  can- 
not sa}',  but  I  am  sure  that  what  is  needed  in  the  West 
is  not  so  much  more  money  as  better  money,  and  greater 
and  cheaper  means  for  the  transportation  of  its  products 
to  the  markets.  There  is  no  class  of  men  who  are  so 
much  injured  by  irredeemable  paper  money  as  the  agri- 
culturists. It  is  the  farmer,  especially,  who  is  cheated 
by  fictitious  money.  It  is  said,  I  know,  that  he  pays 
his  taxes  with  it  and  for  what  he  needs  to  purchase,  but 
is  it  not  true  also  that  it  increases  his  taxes  and  adds 
largely  to  the  cost  of  what  he  buys? 

The  cotton,  sugar,  and  rice  of  the  South,  and  the 
grain,  beef,  and  pork  of  the  West,  are  needed  at  home 
and  by  foreign  nations,  and  they  will  always  command 
money.  The  people  who  have  them  to  dispose  of  must 
decide  what  kind  of  money  it  shall  be — money  in  the 
form  of  broken  promises,  or  gold  and  silver  and  con- 
vertible bank-notes. 

I  have  been  for  a  long  time  absent  from  the  countr}-, 
but  I  am  greatly  deceived  if  the  demand  at  the  West 
for  more  currency  does  not  come  chiefly  from  those  who 
have  little  or  nothing  to  sell,  and  who  would  be  conse- 
quently injured  by   a  compliance  with  their  demands. 


77 

There  may  be  at  present  depression  in  the  price  of  ag- 
ricultural products,  but  this  is  not  owing  to  a  scarcity 
of  money,  but  to  a  falling  off  in  the  demand  for  them. 
Consumption  at  home  is  less  and  the  foreign  demand  is 
smaller  than  they  have  been.  Many  of  our  manufac- 
tories are  idle,  and  the  European  markets  are  disturbed 
by  our  financial  troubles.  It  is  these  causes,  which  are 
only  temporary,  and  not  scarcity  of  money,  which  occa- 
sion the  depression  which  at  present  exists. 

There  has  never  been  a  time  when  the  products  of 
the  West  (I  can  speak  advisedly  of  this  section)  have 
failed  to  bring  what  they  were  really  worth,  according 
to  prices  at  the  home  and  foreign  markets,  for  want  of 
money  to  pay  for  them,  and  there  will  never  be.  I 
know  that  these  products  have  commanded  at  various 
times  only  extremely  low  prices,  but  this  was  owing  to 
a  lack  of  means  of  transportation  or  of  a  supply  superior 
to  the  demand.  The  fact  that  nine  out  of  ten  of  those 
who  have  been  engaged  in  buying  and  shipping  the 
products  of  the  West  to  the  seabord,  where  prices  are 
usually  regulated  by  the  European  markets,  have  failed 
in  business,  is  an  evidence  that  these  products  have  not 
been  sacrificed  or  sold  at  home  for  less  than  their  value 
b}^  reason  of  a  scarcity  of  money. 

There  need,  then,  be  no  apprehension  on  the  part  of 
the  farmers  of  the  West  that  they  would  be  injured,  or 
that  there  would  be  a  scarcity  of  money,  by  reason^  of 
the  withdrawal  of  the  United  States  notes  or  a  reduction 
of  paper  circulation.  For  every  dollar  of  depreciated 
currency  withdrawn  they  would  have  a  dollar,  in  value 
at  least,'  of  convertible  paper  or  of  specie.  What  is  true 
in  regard  to  farmers  is  equally  true  in  regard  to  manu- 
facturers, merchants,  and  laborers. 

My  own  deliberate  opinion  is  that  we  shall  never  have 
really  cheap  money,  as  we  can  never  have  reliable  money 
until  the  United  States  notes  are  stripped  of  their  false 
character  and  retired  from  circulation  and  their  place  is 
supplied  by  specie  and  perfectly  secured  convertible 
bank-notes.  Specie  will  cease  to  flow  out  of  the  coun- 
try as  it  now  does,  and  will  commence  flowing  in,  as 
soon  as  we  drive  out  of  circulation  the  notes  which  have 
deprived  it  of  its  monetary  character* 


78 

The  product  of  our  gold  and  silver  mines  leaves  us 
because  we  have  no  use  for  it.  As  it  is  not  a  circulating 
medium,  nor  a  basis  for  it.  it  would  be  a  burden  if  it  re- 
mained. 

In  regard  to  a  substitution  of  bank-notes  for  green- 
backs, I  have  only  to  sa}^  that  there  ought  not  to  be, 
and  there  will  not  long  be,  two  kinds  of  paper  money 
in  circulation.  One  kind  or  the  other  will  occupy  the 
field.  This  I  think  inevitable.  We  shall  get  rid  of  the 
United  States  notes,  or  there  will  be  an  irresistible  de- 
mand for  more  of  them.  I  advocate  the  substitution  of 
bank-notes  for  United  States  notes,  because  the  latter 
stand  in  the  way  of  a  return  to  specie. 

The  Government  lacks  the  means  and  the  machinery 
to  keep  in  circulation  a  convertible  currency  of  its  own. 
To  maintain  such  a  currency  the  Treasury  Department, 
or  a  department  to  be  created  for  this  purpose,  would 
necessarily  become  a  bank  of  issue.  Such  a  bank  would 
be  as  unsuited  to  our  institutions,  as  it  would  be  deficient 
in  the  power  to  give  flexibility  to  its  issues  and  secure 
a  just  "and  equal  distribution  of  them  throughout  the 
country.  For  such  an  experiment  the  people  are  not 
prepared.  As  long  as  we  have  a  legal-tender  paper  cur- 
rency we  shall  have  an  inconvertible  currency. 

I  advocate  the  substitution  of  bank-notes  for  United 
States  notes  also.,  because  I  regard  it  of  exceeding  impor- 
tance that  the  subject  of  the  currency  should  be  with- 
drawn from  politics.  PoUticians  are  necessarily  agita- 
tors; they  cannot  be  otherwise.  They  need  capital, 
and  agitation  is  capital.  That  this  capital  should  not  be 
made  by  a  perpetual  interference  with  what  affects  every 
man's  interest  is  an  obvious  truth.  A  Government  cur- 
rency, therefore,  is  not  what  is  needed  for  a  circulating 
medium.  No  political  party  should  be  intrusted  with 
the  power  of  making  money,  or  what  is  called  mone}^ 
scarce  or  plenty  at  pleasure. 

Uet  the  United  States  notes  be  retired;  let  the  re- 
straints upon  bank  circulation  be  removed;  let  banking 
be  free  and  the  business  of  banking  be  managed  by 
those  who  embark  in  it;  let  the  circulation  of  banks,  se- 
cured by  the  bonds  of  the  Government,  be  regulated 
])y  their  ability  to  redeeni  and  by  the  requirements  of 


79 

the  country,  and  we  shall  have  that  freedom  from  politi- 
cal interference,  and  that  flexible,  3^et  vStable,  because 
convertible,  currenc}^  which  is  needed  to  stimulate  en- 
terprise and  to  secure  to  labor  its  proper  reward. 

The  loss  that  the  people  would  sustain  in  the  matter 
of  interest,  by  the  withdrawal  of  United  States  notes,  if 
this  loss  should  not  be  made  up  by  the  taxes  assessed 
upon  the  banks  and  the  facilities  which  they  render  to 
business,  would  be  small  in  comparison  with  what  would 
be  gained  by  the  withdrawal  of  the  currency  question 
from  the  arena  of  politics.  I  am  no  advocate  of  banks. 
If  they  did  not  exist  I  might  regard  the  creation  of 
them  a  question  of  doubtful  expediency,  but  they  are  so 
interwoven  with  our  financial  interests  that  they  could 
not  be  destroyed  without  a  financial  revolution.  And  it 
must  be  borne  in  mind,  in  considering  our  banking  sys- 
tem, that  it  is  a  very  different  one  from  that  which  it 
superceded,  inasmuch  as  it  gives  to  the  people  a  circu- 
lation of  uniform  values  and  unquestionable  solvency. 
It  is  undoubtedly  the  best  system  now  in  existence,  and 
it  should  be  sustained  until  a  better  one  is  devised  or 
until  the  country  is  prepared  to  do  without  banks  alto- 
gether. 

In  what  I  have  said  in  regard  to  the  United  States 
notes,  I  must  not  be  understood  as  reflecting  upon  the 
financial  minister  who  advocated  or  the  Congress  who 
authorized  the  issue. 

In  regard  to  the  wisdom  of  this  measure,  there  are 
now,  as  there  were  then,  differences  of  opinion;  but,  ad- 
mitting that  this  was  not  a  wise  measure,  the  advocacy  of 
it  ought  not  to  detract  from  the  great  merit  of  Mr.  Chase, 
to  whose  administration  of  the  Treasury  the  successful 
termination  of  the  war  is  very  largely  to  be  attributed. 
If  Mr.  Chase  lacked  financial  training  and  experience, 
he  possessed  what  was  better  in  the  trying  circumstances 
in  which  he  was  placed — courage,  nerve,  faith.  Great 
victories  in  the  field  are  but  seldom  won  by  a  strict  ad- 
herence to  the  scientific  rules  of  war;  great  com- 
manders are  seldom  found  in  distinguished  military  en- 
gineers. The  same  is  true  in  great  financial  contests, 
and  the  contest  between  the  Government  and  the  South- 
ern States  was  as  much  a  contest  of  dollars  as  of  arms, 


80 

If  the  Government  had  broken  down  financial!}'  the  re- 
bellion would  not  have  been  suppressed.  That  it  did 
not  break  down  was  largely  owing  to  the  qualifications 
of  Mr.  Chase  for  the  position  he  held.  He  undoubtedly 
made  mistakes;  there  is  cause  for  wonder  that  he  did 
not  make  more.  I  do  not  believe  there  was  another 
man  in  the  Union  who  would  have  made  less. 

PKNDLETON'S    issue    in    INDIANA. 

There  is  another  subject  to  which  I  should  not  allude  if 
there  was  not  a  ''plank  in  the  platform"  adopted  by  the 
recent  Democratic  convention  at  Indianapolis  in  favor  of 
the  payment  of  the  five-twenty  bonds  in  greenbacks.  Al- 
though it  is  known  that  party  platforms  are  usually  made 
to  be  disregarded  and  '  'spit  upon, ' '  the  expression  of  such 
a  sentiment  by  an  intelligent  and  highly  respectable  body 
of  men,  claiming  to  represent  a  great  political  party, 
whose  record  upon  financial  questions  has  been  most 
creditable,  is  calculated  to  mislead  well-meaning  people, 
if  not  to  damage  the  national  credit.  This  subject  is 
rapidly  losing  its  interest  in  a  pecuniary  point  of  view- 
by  the  fact  that  the  five-twenties  are  being  rapidly  con- 
verted into  five-per-cents.,  which,  in  order  to  prevent 
any  question  in  regard  to  the  currency  in  which  they 
are  to  be  paid,  are  upon  their  faces  made  payable  in  coin. 

Still,  presented  as  it  has  been  for  the  consideration  of 
the  voters  of  Indiana,  it  is  not  without  importance.  I 
feel  it  to  be  important  because  it  affects  the  good  name 
of  my  own  State.  That  such  a  proposition  should  be 
revived  by  men  claiming  to  represent  Democracy,  in- 
dicates a  want  of  political  sagacity  on  their  part  and  an 
abandonment  by  them  of  principles  to  which  the  Demo- 
cratic party,  in  the  palmy  days  of  its  greatness  and 
power,  conscientiously  adhered,  and  which  it  must  again 
avow  and  adhere  to  if  it  is  to  become  the  party  of  the 
future,  as  it  has  been  of  the  past. 

If  this  resolution  of  the  convention  truly  expresses  or 
reflects  the  sentiments  of  the  Democrac}-  of  Indiana,  it 
is  hoped  that  the  spirits  of  Jefferson  and  Jackson,  of 
Benton  and  Wright,  and  the  host  of  other  Democratic 
worthies  whose  fame  is  the  nation's  pride,  do  not  witness 
the  apostasy  of  those  who  claim  to  be  their  followers. 


81 

That  the  five-twenty  bonds  should  not  and  cannot  be 
paid  in  depreciated  greenbacks  is  evident  for  the  fol- 
lowing reasons: 

First.  These  bonds  are  national  obligations,  intended 
to  be  circulated  and  held  in  foreign  countries  as  well  as 
in  the  United  States,  and  all  such  obligations  are  always 
understood  to  be  payable  in  the  currency  which  alone 
is  recogni/.ed  as  money  by  the  common  consent  of  the 
great  famih-  of  nations. 

Second.  They  cannot  be  so  paid,  because  it  could  not 
be  done  without  increasing  the  issue  of  the  legal-tender 
notes  beyond  $400,000,000,  and  a  large  portion  of  these 
bonds  were  issued  after  the  faith  of  the  Government 
had  been  pledged  by  act  of  Congress  that  this  should 
be  the  limit,  and  because  Congress  by  a  special  act  of 
1869  declared  that  these  bonds  are  pa^^able  in  coin. 

Third.  Because  it  was  the  express  understanding  be- 
tween the  Government  and  the  people  when  these  bonds 
were  issued  that  the  principal  as  well  as  the  interest 
should  be  paid  in  coin.  • 

The  language  of  the  resolution,  "  We  are  in  favor  of 
the  redemption  of  the  five-twenty  bonds  in  greenbacks, 
according  to  the  law  under  which  they  were  issued,"  if 
not  positively  untrue,  is  calculated  to  mislead.  That  these 
bonds  should  be  paid  in  greenbacks  is  not  in  accordance 
with  the  law  under  which  they  were  issued;  the  re- 
verse is  the  fact.  It  is  true  that  the  law  does  not  ex- 
pressly state  that  they  are  payable  in  coin,  but  it  is  pro- 
vided that  the  interest  shall  be  so  paid.  If  it  is  silent 
in  regard  to  the  principal,  it  is  because  no  one  at  that 
time  regarded  the  United  States  notes  as  anything  else 
than  a  temporary  currency,  which  was  to  be  redeemed 
or  retired  by  conversion  into  bonds  long  before  the 
bonds,  by  their  terms,  would  be  brought  under  control 
of  the  Government.  By  every  member  of  the  House 
and  of  the  vSenate  who  participated  in  the  debate  when 
the  issue  of  these  bonds  was  under  consideration,  and 
who,  in  terms,  alluded  to  them,  they  were  spoken  of  as 
gold  bonds.  Who,  in  fact,  ever  heard  of  a  national  ob- 
ligation, the  interest  on  which  was  payable  in  one  kind 
of  currency  and  the  principal  in  another  ?  And  what  would 
be  thought  of  a  people  who  should    take  advantage  of 


82 


the  technical  construction  of  their  own  law  and  compel 
the  holders  of  their  bonds  to  take  in  payment  thereof 
their  own  dishonored  and  depreciated  paper,  notwith- 
standing their  servants  in  the  Treasury  Department, 
their  agents  who  solicited  subscriptions,  and  the  public 
press,  with  the  full  knowledge  and  approval  of  the  law- 
making power,  had  represented  the  principal  as  well  as 
the  interest  of  the  bonds  to  be  payable  in  coin  ? 

To  do  such  an  act  the  people  of  the  United  States 
would  reach  a  depth  of  degradation  and  dishonor  to 
which  no  nation  has  yet  descended. 

The  vStatement  of  the  proposition,  stripped  of  all  dis- 
guises, is  enough  to  condemn  it  in  the  estimation  of  hon- 
orable men.  It  is  not,  I  am  sure,  in  harmony  with  the 
sentiments  of  a  majority  of  the  Democrats  of  Indiana. 
As  a  bid  for  votes,  the  resolution  of  the  convention  was 
a  blunder,  which  in  politics  is  worse  than  a  crime.  Mor- 
ally and  economically  considered,  as  well  as  politically, 
if  it  was  an  expression  of  the  intelligent  sentiment  of 
its  members  (which  I  apprehend  it  was  not),  it  might 
justly  be  pronounced  a  crime  and  blunder  combined. 

THE   TARIFF. 

I  have  said  so  much  upon  the  currency  question  that 
I  have  neither  time  nor  space  to  dwell  upon  the  question 
of  the  tariff.  Nor  is  it  necessary  that  I  should,  as  it  is 
a  question  which  is  being  discussed  by  those  who  have 
given  to  it  much  more  attention  than  I  have  and  who 
understand  it  better. 

I  favor  a  revenue  and  not  a  protective  tariff.  The 
present  tariff  has  been  highly  productive  of  revenue, 
and  it  is,  therefore,  contended  that  it  is,  in  fact,  a  reve- 
nue tariff,  and  that  inasmuch  as  a  large  portion  of  our 
revenues  are  to  be  derived  from  custom  duties,  the  dif- 
ference between  a  tariff  for  protection  and  a  tariff  for 
revenue  must  always  be  imaginary  rather  than  real. 

Now,  while  it  is  true  that  since  1862  the  importations 
into  the  United  States  have  been  heavy,  and  the  reve- 
nues from  this  source  have  been  consequently  large,  it 
does  not  follow  that  the  present  tariff  is,  in  the  proper 
meaning  of  the  term,  a  revenue  tariff. 


88 


It  was  intended  and  framed  to  protect  certain  inter- 
ests in  the  United  States,  and  it  has  done  and  is  still 
doing  this,  by  preventing  fair  competition  between  home 
and  foreign  manufactures,  thereby  increasing  to  con- 
sumers the  cost  of  many  articles  of  common  and  indis- 
pensable use.  It  is  true,  also,  that  this,  to  some  extent, 
must  be  the  effect  of  any  system  of  raising  revenue  by 
customs  duties;  and  that  free  trade,  desirable  as  it  may 
be,  is  not  likely  to  be  adopted  as  long  as  large  revenues 
are  needed  for  the  payment  of  the  public  debt  and  for 
defraying  the  expenses  of  the  Government. 

Indirect  taxation,  especially  taxation  upon  imports, 
is  undoubtedly  the  most  expensive  and  demoralizing,  if 
not  the  most  unequal,  mode  of  raising  revenue  that  has 
ever  been  resorted  to;  and  yet  it  is  the  most  popular, 
because  it  is  not  inquisitorial.  It  does  not  introduce  the 
tax  gatherer  to  the  consumer,  and  it  is  felt  only  in  the 
enhanced  prices  of  the  articles  which  are  subject  to  it, 
the  cause  of  which  enhanced  prices  is  not  often  consid- 
ered. The  policy  of  raising  revenues  by  taxes  upon 
imports  is  not  to  be  abandoned,  and  it  will  not  be  possi- 
ble, even  if  it  were  desirable,  to  frame  laws  which 
will  yield  such  revenues  as  will  be  required  from  this 
source  without  giving  to  home  industry  liberal  protec- 
tion. 

Now,  what  I  think  the  people  should  earnestly  and 
persistently  contend  for  is  a  tariff  in  which  revenue 
should  be  the  object  and  not  the  incident.  Let  a  com- 
mission fairly  representing  the  different  sections  of  the 
country  be  appointed  by  Congress  to  prepare  a  bill  the 
aim  of  which  should  be  to  raise  the  necessary  revenues 
from  the  smallest  possible  number  of  articles,  discarding 
the  policy  of  protection,  and  which  should  be  so  clear  in 
its  provisions  and  language  that  common  people  could 
understand  it.  I  suggest  that  such  a  bill  should  be  pre- 
pared by  a  commission,  because  it  seems  to  me  to  be 
the  only  means  b}^  which  an  intelligible,  symmetrical 
and  consistent  bill  can  be  procured. 

As  long  as  tariff  bills  are  prepared  by  committees  that 
do  not  command  the  confidence  of  the  House  in  a  suffi- 
cient degree  to  insure  their  passage  through  that  body 
without  important  alterations,  and  such  bills  are  subject 


84 


to  further  alterations  by  the  Senate,  and  receive  their 
final  touches  from  committees  of  conference,  amid  the 
haste  and  confusion  which  distinguish  the  closing  hours 
of  the  session,  we  shall  have  inconsistent  patchwork, 
difficult  to  understand  and  fruitful  of  fraud  and  litigation, 
instead  of  symmetrical,  consistent,  and  intelligible 
laws. 

It  is  true  that  the  work  of  a  commission  would  be  sub- 
ject to  the  same  ordeal  as  would  the  reports  of  the  Ways 
and  Means  and  Finance  Committees;  but  as  the  com- 
mission would  be  selected  for  the  single  purpose  of  pre- 
paring a  tariff,  it  would  be  more  likely  to  fairly  represent 
the  different  sections  of  the  country  than  a  committee. 
It  would  have  more  time  for  the  preparation  of  a  bill 
than  a  committee,  and  if  composed,  as  it  ought  to  be,  of 
able  and  upright  men — not  partisans  nor  the  representa- 
tives of  particular  interests — I  believe  such  a  commis- 
sion could  prepare  a  bill  that  would  be  carried  through 
both  Houses  without  change. 

It  cannot  be  denied,  I  apprehend,  that  by  the  present 
tariff  both  the  revenues  and  the  people  are  badly 
cheated;  that  it  is  in  regard  to  some  articles  prohibitory; 
that  it  increases  the  cost  of  many  things  without  yield- 
ing revenue  enough  therefrom  to  cover  the  expense  of 
collecting  it.  thereby  profiting  home  manufacturers  to 
the  amount  of  that  increased  cost,  without  benefiting 
the  Government;  that  by  the  heavy  duties  upon  some 
kinds  of  raw  material  it  has  rendered  unprofitable  and 
gradually  destroyed  industries  that  before  the  war  were 
prosperous  and  profitable;  and,  finally,  that  it  is  difficult 
of  interpretation,  and  in  some  points  inconsistent,  thus 
opening  the  door  to  fraud,  if  not  inviting  it,  on  the  part 
of  importers,  and  giving  opportunity  for  oppression  and 
dishonest  practices  to  the  officers  of  the  customs. 

Whether  the  protective  principle  be  retained  or  not, 
there  is  no  question  that  the  present  tariff  should  be 
subjected  to  a  thorough  revision,  and  I  believe  that  this 
will  only  be  done  in  the  manner  in  which  it  ought  to  be 
done  through  the  agency  of  a  commission. 

The  policy  of  protection  should,  in  my  judgment,  be 
abandoned,  because  it  favors  by  direct  legislation  par- 
ticular interests;  because  it  induces   the  manufacturer 


to  rely  upon  the  Government,  in  a  contest  with  foreign 
competitors,  instead  of  cultivating  skill,  economy,  and 
a  spirit  of  self-reliance,  which  are  so  important  for  suc- 
cess in  all  branches  of  business;  because  as  we  cannot 
sell  liberally  unless  we  buy  liberally,  it  diminishes  the 
foreign  demand  for  our  agricultural  and  other  products, 
and  consequenth^  lessens  the  price  of  them;  because  it 
is  inconsistent  with  the  spirit  of  the  age,  which  demands 
that  all  unnecessary  obstacles  in  the  way  of  the  freest 
exchange  of  products  between  nations  should  be  re- 
moved, and  because  its  end,  if  not  its  aim,  is  to  enrich 
the  few  at  the  expense  of  the  man}-. 

In  its  essential  character  a  protective  tariff  is  barbar- 
ism. Such  a  tariff  may  be  defended  for  a  time,  like  our 
irredeemable  currency',  on  the  ground  of  necessity,  but 
not  as  a  permanent  national  policy.  I  am  not  prepared 
to  sa}^  that  there  have  not  been  periods  in  the  history  of 
our  manufactures  when  protection  was  necessary  in 
order  that  inducements  might  be  offered  to  capitalists 
to  engage  in  them  and  that  labor  might  be  properly  ed- 
ucated; but  such  periods  have  passed  b}'.  Our  manu- 
facturing interests,  long  fostered  by  the  Government,  no 
longer  need  protection  against  foreign  capital  and  skill. 
If  they  were  not  able  in  their  infancy  to  stand  alone, 
they  are  able  now;  but  even  this  they  will  not  be  re- 
quired to  do,  as  they  will  have  the  advantage  over  their 
foreign  rivals  which  duties  for  revenue  and  the  cost  of 
transportation  afford.  That  this  will  be  sufficient  not 
only  to  enable  them  to  continue  business,  if  economically 
conducted,  but  to  make  handsome  profits,  there  can  be 
little  doubt.  If  there  be  any  kind  of  manufacturing  in 
the  United  States  that  cannot  live  with  such  advantages 
as  a  judicious  revenue  tariff  and  the  cost  of  transporta- 
tion from  other  countries  will  give  to  it,  it  is  very  clear 
that  it  is  unfitted  to  the  country  or  to  the  habits  of  the 
people,  and  that  it  ought  not  to  be  encouraged.  I  have 
so  high  an  opinion  of  the  faculty  of  my  countrymen  in 
the  invention  and  use  of  machiner}^  that  I  am  satisfied 
there  is  no  branch  of  manufactures  suited  to  the  coun- 
try which  has  prospered  under  existing  laws  which 
would  not  continue  to  prosper  even  under  a  system  of 
absolute  free  trade. 


86 


It  is  very  certain  that  under  a  wise  tariff  many  new 
industries  would  come  into  existence,  and  others  which 
have  died  out  or  are  languivShing  under  existing  laws 
would  be  restored  to  life  and  quickened  into  prosperous 
activity.  I  have  time  to  mention  but  a  single  instance. 
Iron  ships  can  even  now  be  built  about  as  cheaply  in 
the  United  States  as  they  can  be  in  Europe.  With  a  re- 
duction of  duties  upon  the  materials  which  are  used  in 
their  construction,  the}^  could  be  built  cheaper.  So  that 
the  great  ship  yards  for  building  iron  ships,  not  onh'  for 
the  United  States,  but  for  other  nations,  w^ould  be  found 
at  no  distant  day  on  the  Delaware  instead  of  the  Clyde. 

The  State  of  Pennsylvania — an  empire  of  itself — clings 
to  protection  as  if  her  prosperity  depended  upon  it;  but 
she  will  never  know  hoW  great  her  resources  and  power 
are,  nor  what  her  people  are  capable  of  accomplishing, 
until  she  ceases  to  look  to  the  Government  to  protect 
her  industries  and  learns  to  rely  upon  herself.  There 
is  no  more  reason  wh}^  she  should  ask  the  Government 
to  protect  her  iron  manufacturers  against  foreign  com- 
petitors than  against  the  competition  of  Missouri,  Vir- 
ginia, and  Tennessee. 

The  plea  that  American  labor  must  be  protected  against 
what  is  called  the  "pauper  labor"  of  Europe  is,  if  I  ma}'^ 
use  the  expression,  played  out.  Pauper  labor  in  the  fac- 
tories and  furnaces  of  Europe  is  a  myth.  Skilled  labor 
is  in  as  good  demand  and  is  as  costly,  estimating  the 
difference  in  the  cost  of  living,  on  the  other  side  of  the 
Atlantic  as  on  this.  If  it  were  not  so,  the  difference 
would  be  more  than  equalized  by  our  superior  machinery 
and  our  superior  cleverness  in  the  use  of  it.  We  have 
in  the  United  States  the  best  cotton  mills  in  the  world, 
wnth  all  the  capital  that  is  needed  to  run  them,  and  we 
are  producing  better  cotton  than  can  be  grown  else- 
where. Is  it  possible  that  the  cotton  spinners  of  New 
England  need  protection  against  the  cotton  spinners  of 
Great  Britain? 

We  have  iron  literally  cropping  out  of  the  earth — 
mountains  of  it,  in  fact — of  the  bestqualit}' ,  and  coal  for 
smelting  and  manufacturing  it  in  its  immediate  vicinity. 
In  Great  Britain  iron  is  only  found  hundreds,  if  not 
thousands,  of  feet  below  the  surface,  a  large  portion  of 


87 


which  has  to  be  transported  at  great  expense  to  the  coal 
districts  to  be  manufactured,  and  at  still  greater  expense, 
when  manufactured,  to  the  markets  of  the  United  States. 
Do  the  iron  makers  of  Tennessee,  Missouri,  and  Penn- 
sylvania need  to  be  protected  against  competition  from 
that  quarter  ? 

Coal,  the  producer  of  the  great  motive  power  of  the 
world;  coal,  which  is  found  in  inexhaustible  suppl}^ 
throughout  the  countrj-,  which  is  so  indispensable  in 
manufacturing,  and  in  the  older  States  is  used  by  almost 
every  famil}'  for  fuel — should  coal  be  increased  in  price 
by  a  tariff  which  prevents  the  introduction  of  it  from 
the  Dominion  of  Canada  ? 

Is  it  right  that  every  family  in  the  United  States  should 
pay  an  extra  price  for  the  salt  it  uses  for  the  benefit  of 
the  few  who  are  manufacturing  it,  and  who  can  manu- 
facture it  as  cheaply  as  it  can  be  made  in  any  other 
country  ? 

These  questions  (and  the  number  can  be  largely  in- 
creased) are  not  new,  but  they  lose  none  of  their  inter- 
est because  they  have  been  frequently  asked.  The  pres- 
ent is  a  good  time  for  the  people  to  ponder  them. 

No  protection  laws  were  ever  so  ably  defended  as  the 
Corn  Law  of  England.  No  interest  ever  seemed  to  de- 
mand protection  more  than  the  agricultural  interest  of 
that  country.  It  was  proved,  it  was  thought,  as  clearly 
as  figures  and  arguments  could  prove  anything  that 
free  trade  in  corn  would  be  a  death-blow  to  the  owners 
of  landed  property.  What!  abolish  the  scale  and  open 
the  English  ports  to  the  cheap  grain  of  the  continent 
and  the  United  States  ?  The  very  suggestion  of  such  a 
proposition  by  English  reformers  was  regarded  by  land 
owners  as  evidence  that  the  world  was  moving  in  the 
wrong  direction,  and  that  the  crack-brained  theorists 
were  controling  it. 

Now,  what  was  the  effect  of  the  repeal  of  the  English 
Corn  Laws?  Low  prices  for  lands  ?  Neglect  in  the  cultiva- 
tion of  them  ?  Prostration  of  agricultural  interests  ?  The 
reverse  were  the  facts.  Land,  instead  of  declining,  ad- 
vanced in  value.  The  cultivation  of  it  was  at  once  im- 
proved, and  the  interest  which  it  was  feared  was  to  be 
prostrated  by  free  tiade  in  breadstuffs  speedily  became 


8S 

vastly  more  prosperous  than  ever.  The  English  land- 
holder who  should  now  advocate  the  re-enactment  of 
the  Corn  Laws  would  be  considered  a  fit  subject  to  be 
handed  over  to  the  surgeon  to  be  operated  upon  for  the 
* '  simples."  The  same  will  be  true  in  regard  to  the  pro- 
tection laws  now  in  force  in  the  United  States.  It  will, 
at  no  distant  day,  be  as  difficult  to  find  a  protection- 
ist in  this  country  as  it  is  to  find  a  land-holder  in  England 
who  would  acknowledge  that  he  ever  favored  the  Corn 
Laws. 

The  United  States  with  her  rich  soil,  abounding  re- 
sources, and  intelligent  people  will  prosper  no  matter 
what  laws  be  upon  the  statute  book.  But  she  will  never 
make  the  advance  which  she  is  capable  of  making  in 
wealth,  in  morals  and  civilization  until  she  has  a  sound 
currency  and  freer  trade  with  foreign  nations. 


LKTTERS 

WRITTEN    FOR 

THE  NEW  YORK  TRIBUNE. 


LETTER 

WRITTEN  FOR 

THE   NEW    YORK   TRIBUNE. 


First  Letter. 

To  the  Editor  of  The  Tribune : 

Sir  :  Agreeably  to  3'oiir  request,  I  will  try  to  find  time 
to  send  you  an  occasional  letter  upon  the  general  sub- 
ject of  the  finances  of  the  United  States,  with  more 
especial  reference  to  the  currency.  Some  years  ago  my 
views  were  pretty  fully  presented  in  my  reports  to  Con- 
gress. Those  which  I  then  advanced  have  undergone 
no  change  ;  on  the  contrary,  my  convictions  of  their 
correctness  have  been  confirmed  and  strengthened  by 
reflection  and  observation.  I  have  nothing  new  to  say 
upon  the  subject  now,  but  in  writing  in  this  way  from 
this  side  of  the  Atlantic,  as  a  private  citizen,  I  may. 
reach  many  who  lack  the  time  or  the  disposition  to  look 
into  ofiflcial  documents  or  to  read  more  elaborate  articles. 
In  this  and  the  following  letter  I  shall  allude  to  the 
financial  condition  of  France,  as  introductory  to  what  I 
may  have  to  say  upon  that  of  the  United  States.  _  It  is 
fortunate  that  financial  questions,  or  at  least  the  question  of 
the  currency ,  can  be  discussed  without  exciting  partisan  or 
sectional  prejudice.  Men  may  be  influenced  in  their 
opinions  of  a  tariff,  of  protection,  free  trade,  and  the 
like  by  local  interests,  but  there  can  be  no  local  interests 
in  regard  to  the  currency.  A  sound  and  stable  circulat- 
ing medium  is  the  very  "life-blood  of  a  commercial 
nation."  The  question  of  the  currency  is  a  national 
question,  in  which  all  sections  are  equally  interested, 
and  with  which  party  politics  and  local  jealousies  have 
nothino:  to  do. 


92 

Few  countries  have  ever  been  in  a  worse  condition 
than  France  appeared  to  be  in  at  the  close  of  her  late  war 
with  Germany.  Her  armies  had  been  routed;  her  Em- 
peror had  become  a  fugitive;  her  strongholds,  such  as 
Strausbourg  and  Metz,  had  been  captured;  Paris,  starved 
into  submission,  had  been  captured.  Some  of  her  most 
fertile  and  populous  districts  had  been  so  devastated 
that  agents  of  contributors  in  Great  Britain  and  the 
United  States  had  been  sent  into  them  to  suppl}^  their 
unfortunate  inhabitants  with  food  and  clothing,  farming 
implements,  and  seeds  for  the  next  year's  crop;  and  as 
if  all  these  misfortunes  had  not  filled  her  bitter  cup,  it 
had  been  filled  to  overflowing  by  a  bloody  contest — 
Frenchmen  against  Frenchmen — for  the  possession  and 
control  of  Paris.  Her  beautiful  capital  had  been  again 
besieged,  not  by  foreigners,  but  by  her  own  people;  the 
monuments  of  her  glory  had  been  destroyed,"  not  by  the 
Germans,  but  by  those  who  had  shared  in  the  national 
honor  of  the  achievements  which  these  monuments  com- 
memorated. By  this  civil  war,  so  unnatural  and  so  de- 
plorable, the  sympathy  of  other  nations  excited  in  her 
behalf,  as  defeat  followed  defeat  in  her  contest  with  the 
Germans,  had  been  turned  into  indifference,  if  not  into 
disgust,  and  so  helpless  had  she  become  that  submission 
to  the  demands  of  the  conqueror  was  her  only  alterna- 
tive.^ What  those  demands  were  the  world  knows — the 
cession  of  two  of  her  beautiful  and  productive  provinces 
and  the  pa3mient  of  a  thousand  millions  of  dollars  to  in- 
demnify Germany  for  the  expenses  of  the  war.  Never 
before  had  a  great  and  powerful  nation  been  so  speedily 
and  thoroughly  mastered;  rarely,  if  ever,  had  a  brave 
and  proud  people  been  compelled  to  conclude  hostilities 
with  so  disastrous  results.  With  a  Government  pro- 
visional only;  with  a  demoralized  people;  with  an 
empty  treasury,  an  immense  debt  to  be  nearly  doubled 
by  the  expenditures  of  a  single  year  (including  the  in- 
demnity), this  great  nation,  hitherto  one  of  the  most 
powerful  and  influential  in  Europe,  seemed  to  be  on  the 
verge  of  political  and  financial  ruin. 

Such  was  France  as  she  appeared  before  the  world 
some  four  years  ago,  and  what  is  her  condition  to-day  ? 
I  allude  not  to  her  political  condition — although  in  the 


93 

organi2;ation  of  a  government  on  a  republican  basis  she 
has  surprised  the  world  b}-  her  wisdom  and  prudence — 
but  what  is  her  financial  condition?  It  is  in  most  re- 
spects better  than  that  of  any  nation  in  the  world.  Her 
waste  places  have  been  restored;  her  industries  have 
been  stimulated  into  unprecedented  activity;  her  ex- 
ports, largely  exceeding  her  imports,  have  made  her  a 
great  creditor  nation,  so  that  gold  has  been  steadily 
drawn  to  her  from  England,  from  the  United  States,  and 
even  from  Germany,  until  the  Bank  of  France  holds  in 
its  strong  rooms  the  enormous  sum  of  three  hundred 
millions  of  coin  and  bullion,  and  its  notes,  although  not 
absolutely  convertible,  are  only  at  the  tenth  of  one  per 
cent,  discount.  If  her  prostration  was  astonishing  by 
its  suddenness  and  completeness,  her  recuperative 
power  seems  still  more  astonishing.  It  is  undeniable 
that  no  countr}^  in  Europe ,  has  been  so  prosperous  as 
France  has  been  during  the  two  past  years.  In  no  other 
country  has  labor  been  so  well  rewarded.  In  none  has 
there  been  so  little  monetary  or  commercial  disturbance. 
It  is  an  anomaly  in  the  financial  history  of  nations  that 
the  conquering  nation  to  which  an  enormous  indemnity 
has  been  paid,  has  been  from  the  beginning  of  the  pay- 
ment of  the  instalments  subject  to  greater  financial 
disorder  and  embarrassment  than  the  nation  from  which 
the  indemnity  was  exacted.  It  is  true  that  this  in- 
demnity was  paid  with  borrowed  money,  but  it  is  also 
true  that  the  French  people  were  largel}^  the  lenders, 
and  that  the  securities  which  were  subscribed  for  by 
the  citizens  of  other  States  have  been  steadily  going 
back  to  France,  so  that  the  French  debt,  the  largest  in 
the  world  (more  than  twice  as  large  as  that  of  the  United 
vStates),  is  literally  a  home  debt.  Here  let  me  remark 
that  this  enormous  indemnity  of  a  thousand  millions  of 
dollars  was  paid  by  France  to  Germany  in  less  than  two 
years,  with  scarcely  any  disturbance  to  the  money  mar- 
kets of  other  nations,  contrary  to  the  prediction  of  some 
of  the  most  eminent  of  European  financiers.  It  did  not 
seem  possible  that  so  great  a  displacement  of  capital 
could  take  place  without  considerable  disturbance  of 
international  exchanges.  That  this  transfer  was  effected 
within  so  short  a  period  without  producing  the  antici- 


94 

pated  trouble  is  an  evidence  not  only  of  the  wisdom  of 
the  French  financiers  by  whom  the  great  feat  was 
accomplished,  but  also  of  the  prodigious  capital 
now  in  active  employment  among  commercial  nations. 
If  Germany  had  not  at  the  same  time  undertaken  to 
substitute  a  gold  circulating  medium  for  silver  and 
paper,  the  transfer  would  have  been  effected  without 
producing  a  ripple  in  the  current  of  international  ex- 
changes. Now,  the  question  arises,  and  it  is  a  question 
of  especial  interest  to  the  people  of  the  United  States, 
By  what  means  has  France  been  able  to  retrieve  her 
credit  and  recover  from  her  misfortunes  ?  What  is  the 
secret  of  her  recuperative  power  ?  This  question  will 
be  briefly  considered  in  my  next  letter. 
LoxDON,  April  j,  1875. 


'Second   Letter. 

To  the  Editor  of  The  Tribune  : 

Sir  :  In  concluding  my  former  letter  I  suggested  the 
inquiry.  By  what  means  has  France  been  able  to  recover 
from  the  misfortunes  of  the  Franco-German  war  ?  What 
is  the  explanation  of  her  recuperative  power  ? 

In  considering  this  question  it  must  be  conceded  that 
France  was  not  at  the  conclusion  of  her  contest  with 
Germany  a  poor  country;  she  was  only  ostensibly  so. 
Notwithstanding  the  immense  drain  of  men  and  money 
to  which  she  has  been  for  centuries  subjected  by  the 
exhausting  wars  in  which  she  has  been  engaged,  she 
has  always  been  the  richest  of  continental  nations.  It 
will  be  recollected  that  in  the  old  wars  between  France 
and  England,  French  gold  was  frequently  more  potent 
than  French  arms,  and  that,  in  many  instances,  money 
accomplished  what  valor  and  diplomacy  had  failed  to 
achieve.  Within  the  last  thirty  or  forty  years  Great 
Britain,  by  her  extensive  commerce,  her  colonial  trade, 
and  her  manufactures,  may  have  taken  the  lead  in 
wealth;  but  even  this  is  a  mooted  question.  France 
has  been  frequently  impoverished  by  war  and  bad 
government,  but  she  never  could  have  been  considered 


95 

bankrupt,  except  at  the  time  she  substituted  paper  for 
gold  and  attempted  to  make  the  incontrovertible  as- 
signat  the  equivalent  of  coin,  an  experiment  so  dis- 
astrous in  its  results  that  it  is  not  likely  to  be  repeated 
on  this  side  the  Atlantic.  Many  causes  may  be  assigned 
for  the  wealth  which  France  has  been  found  to  possess 
in  all  great  emergencies,  among  which  are  the  follow- 
ing: 

The  French  people  are  an  eminently  economical  and 
thrifty  people.  A  French  family  can  live,  and  live  well, 
on  less  than  would  be  considered  sufficient  to  save  from 
starvation  an  American  family  of  the  same  numbers. 
An  intelligent  Bostonian,  who  had  spent  some  years  in 
France,  said  to  me  last  summer,  in  speaking  of  the 
economical  habits  and  skill  in  cookery  of  the  French 
people,  that  "a  French  village  of  a  thousand  inhabi- 
tants could  be  supported  luxuriously  on  the  waste  of 
one  of  our  large  American  hotels."  The  remark  was 
not  far  from  the  truth.  If  the  art  of  cookery  were 
understood  and  practiced  in  the  United  States  as  it  is  in 
France — if  our  people  knew  as  well  how  to  make  the 
most  of  their  provisions  as  the  French  do — the  cost  of 
living,  as  far  as  food  is  regarded,  in  most  of  the  States 
would  be  reduced  more  than  50  per  cent.  Domestic 
economy,  as  a  rule,  is  neither  practiced  nor  understood 
by  Americans  as  it  is  in  France.  It  may  not  be  too 
much  to  say  that  the  entire  population  of  France  could 
be  supported  on  food  which  is  literally  wasted  in  the 
United  States.  The  number  of  people  who  live  beyond 
their  incomes  is  less  and  the  number  of  those  whose 
incomes  exceed  their  expenditures  is  greater  in  France 
in  proportion   to  population  than  in  any  other  country. 

Then,  again,  the  French  are  beyond  all  others^  a 
hoarding  people.  There  are  few  artisans  in  the  cities 
or  peasants  in  the  agricultural  districts  who  do  not  keep 
a  reserve  of  coin  in  their  own  custody.  There  has 
always  been  more  gold  hoarded  in  France  than  in  all 
other  European  countries  combined.  It  is  true  that 
the  nation,  according  to  the  recognized  principles  of 
political  economy,  has  been  the  loser  by  having  so  much 
money  lying  idle  instead  of  performing  its  proper  office 
as  a  circulating  medium,    but  the  common   people  of 


96 

France  have  a  political  economy  of  their  own.  They 
hoard  their  earnings,  parting  with  them  only  under 
pressing  necessities,  or  in  exchange  for  their  own  public 
securities,  in  which,  and  in  which  only,  the  masses  have 
confidence,  so  that  there  has  always  been  in  France  an 
enormous  amount  of  gold  and  silver  which  the  Govern- 
ment could  reach — in  recent  years  by  the  offer  of  at- 
tractive loans  to  popular  subscriptions;  in  former  years 
by  measures  the  justice  of  which  it  is  not  now  worth 
while  to  consider.  This  habit  of  hoarding  is  of  course 
not  to  be  commended,  but  it  is  by  no  means  certain  that 
France,  in  the  circumstances  in  which  she  has  been 
placed,  has  not,  on  the  whole,  been  the  gainer  by  it. 

It  is  very  clear — and  the  foregoing  remarks  are  to 
.some  extent  an  explanation  of  the  fact — that  France 
was  not  so  destitute  as  she  appeared  to  be  when  Great 
Britain  and  the  United  States  so  promptly  and  gener- 
ousl}^  responded  to  the  call  for  help  which  came  up  from 
her  devastated  provinces.  Many  thousands,  if  not  mil- 
lions, of  francs  have  gone  from  these  very  provinces, 
since  that  time,  as  subscriptions  to  Government  and 
municipal  loans,  and  if  the  truth  could  be  revealed  it 
would  be  discovered  that  not  a  few  to  whom  relief  was 
extended  kept  back  a  part,  at  least,  of  their  little  re- 
serves against  still  more  pressing  emergencies.  But  al- 
though France,  at  the  close  of  the  Franco-German  war, 
was  not  in  the  condition  she  was  supposed  to  be  in  by 
those  who  were  unacquainted  with  the  habits  and  char- 
acter of  her  people,  her  condition  was,  in  fact,  a  most 
critical  one,  and  one  that  required  in  the  management 
of  her  finances  the  greatest  prudence  and  practical  skill. 
Fortunately  for  the  welfare  of  the  nation,  the  wisdom 
and  skill  which  the  emergency  required  were  not  want- 
ing. So  wisely  and  skilfully  have  her  finances  been 
managed,  and  so  rapidly  has  the  country  recovered 
from  its  recent  prostration,  that  not  only  has  the  indem- 
nity been  paid  without  disturbing  the  mone}^  markets  of 
other  nations,  and  the  exchanges  become  so  favorable 
as  to  supply  the  Bank  of  France  with  the  coin  necessary 
to  enable  it  to  resume  specie  payments,  which  is  speed- 
ily to  take  place — not  only  has  this  been  accomplished, 
but  French  capitalists,  in  the  absence  from  the  markets 


97 


of  French  securities  are  seeking  for  investment  the  se- 
curities of  other  nations.  Paris  has  for  some  time  been 
a  liberal  buyer  in  the  London  market  of  foreign  bonds, 
and  as  order  after  order  is  filled,  one  constantly  hears 
from  the  dealers  the  expression  of  amazement  that  a 
country  which  less  than  four  years  ago  seemed  to  be 
upon  the  high  road  to  bankruptcy  should  be  exhibiting 
such  practical  evidences  of  wealth.  The  explanation 
has  partially  been   given.     Let  us  look  a  little  further: 

1.  The  French  are  not  only  an  economical  and  hoard- 
ing people,  but  they  are  exceptionally  industrious.  In 
the  manufacturing  as  well  as  in  the  agricultural  districts 
all  the  members  of  the  families  of  the  industrial  classes, 
young  and  old,  have  some  emplo3^ment  by  which  money 
is  earned.  Their  separate  earnings  may  be  vSniall,  but 
all  contribute  something  to  the  common  fund,  so  that 
the  end  of  the  year  finds  the  family  reserve  larger  than 
it  was  at  the  beginning. 

2.  They  are  eminently  skilful  and  tasteful.  The  raw 
materials,  which  are  the  basis  of  articles  of  taste  and 
elegance,  acquired  in  the  hands  of  French  artisans 
greater  value  than  in  the  hands  of  the  artisans  of  any 
other  nation.  The  manufactures  of.  France  are  varied 
and  extensive,  and  being  uninterrupted  by  "strikes," 
her  capacity  to  produce  seems  to  be  almost  unlimited. 
French  goods  are  found  among  all  nations,  and  there  is 
a  constantly  increasing  demand  for  them  at  remunera- 
tive prices.  In  everything  appertaining  to  personal 
adornment  France  leads  the  world.  The  palm  may  be 
yielded  reluctantly,  but  all  nations  do  admit  the 
superiority  of  French  taste  and  of  French  manufactures 
in  all  matters  of  dress.  "  I  should  like  to  see,"  says 
'*H.  H."  in  her  charming  "  Bits  of  Travel,"  "  I  should 
like  to  see  the  woman  who  could  go  through  Paris  with- 
out buying  a  new  gown."  It  would  be  difficult  to  find 
a  tasteful  woman  anywhere  who  does  not  approve  of  the 
latest  style  from  Paris.  The  tribute  which  other  nations 
pay  to  the  ingenuity  of  French  artisans  in  the  manu- 
facture of  dress  goods  and  the  making  up  of  dresses  is 
exceedingly  large.  Even  in  England,  so  diff"erent  in  the 
character  of  her  people,  not  only  has  French  cookery 
superseded  the  English,  but  French  taste  in  everything 


98 

appertaining  to  wearing  apparel  is  the  standard  of  fash- 
ion. 

3.  F'rance  has  a  fine  climate  and  an  excellent  soil,  and 
her  lands,  which  have  been  cultivated  for  centuries,  in- 
stead of  being  exhausted  by  a  vicious  system  of  hus- 
bandry, or  yielding  less  than  formerly  by  unskilful 
tillage,  as  is  unfortunately  the  case  in  many  parts  of  the 
United  States,  are  now  more  productive  than  they  ever 
were  before,  while  the  division  into  small  ownerships, 
the  result  of  the  French  law  of  inheritance,  increases 
every  year  the  acreage  under  cultivation.  Notwith- 
standing her  large  population  to  be  fed  upon  what  her 
soil  produces — a  population  of  some  35,000,000  upon  a 
territory  much  smaller  than  Texas— she  is  a  large  ex- 
porter of  various  kinds  of  agricultural  products.  As  a 
purely  agricultural  country,  she  is  undoubtedly  the  first 
in  Europe;  in  manufactures,  second  only  to  Great 
Britain. 

But  notwithstanding  the  economy,  the  industry,  the 
skill,  the  general  thrift  of  her  people,  and  her  great 
agricultural  resources,  together  with  the  accumulations 
of  former  years,  France  would  not  have  been  able  to  pay 
the  indemnity  exacted  by  Germany  and  to  recover,  as 
she  had  done,  from  the  disastrous  effects  of  the  war  had 
not  the  management  of  her  finances  and  revenues  been 
confided  to  the  hands  of  able,  experienced  and  upright 
men,  and  had  not  her  own  people  and  the 'capitalists  of 
other  nations  relied  implicitly  upon  her  good  faith. 
French  statesmen  have  not  been  notable  examples  of 
political  wisdom  or  conservatism,  nor  have  the  French 
people  been  especially  trustworthy  on  questions  of  gov- 
ernment; but  no  country  has  been  more  favored  in  the 
possession  of  really  able  financiers  and  political  econo- 
mists. Fortunately,  also,  for  France,  agitated  and  dis- 
turbed as  she  has  been  on  political  questions,  the  ques- 
tions of  finance  and  revenue,  upon  which  the  material 
interests  of  the  nation  largely  depend,  have  been  ex- 
cluded from  the  political  arena — will  it  not  be  a  happy 
thing  for  our  people  when  the  same  can  be  said  of  the 
United  States  ? — so  that  the  same  general  financial  and 
economical  policy  has  been  pursued  for  years,  notwith- 
standing the  changes  that  have  taken  place  in  her  forms 


99 


of  government.  The  transition.s  from  monarch}^  to 
democracy,  from  democracy  to  imperialism,  from  im- 
perialism back  to  monarchy,  from  monarchy  back  to 
imperialism,  and  from  imperialism,  to  republicanism, 
have  been  anomalous  and  startling  ;  but  during  all  these 
political  changes  the  financial  and  revenue  departments 
of  the  Government,  except  for  the  brief  period  when  all 
landmarks  were  swept  away,  have  been  administered 
with  singular  steadiness  and  wisdom,  and  with  a  single 
eye  to  developing  the  resources  of  the  nation,  stimulat- 
ing production  and  increasing  foreign  trade.  Generally 
the  revenue  laws,  although  not  frequently  changed, 
have  kept  pace  with  the  progressive  spirit  of  the  age,  the 
tendenc}^  of  which  unquestionably  is  to  give  full  play  to 
international  exchanges.  In  no  previous  period  of  her  his- 
tory have  greater  ability  and  firmness  been  displayed  in 
the  management  of  her  finances  and  the  imposition  of 
taxes  than  during  the  last  four  years.  The  bank-note  cir- 
culation, temporarily  increased  beyond  the  convertible 
point,  was  to  be  brought  up  to  the  specie  standard,  both 
by  a  reduction  of  the  volume  and  an  increase  of  coin. 
The  interest  on  the  public  debt,  vastl}^  augmented  as  it 
had  been,  was  to  be  provided  for,  and  this  could  only 
be  done  by  an  increase  of  taxation.  In  dealing  with 
these  questions  there  has  been  no  resorts  to  expedients; 
no  shuffling,  procrastinating  polic}^  has  been  pursued. 
What  was  necessary  to  be  done  to  accomplish  these 
objects  was  done  well  and  promptly,  and  the  wisdom  of 
the  policy  which  has  been  enforced  has  been  vindicated 
by  the  results.  All  this,  however,  would  not  have 
saved  France,  by  relieving  her  from  the  German  armies, 
if  there  had  been  distrust  in  regard  to  her  good  faith. 
France,  notwithstanding  her  great  resources,  was  only 
saved  by  the  confidence  which  money  lenders  at  home 
and  abroad  had  in  her  integrity.  Some  there  may  have 
been  who  doubted  her  ability  to  pay,  but  nobody  dis- 
trusted her  fidelity.  In  her  darkest  days  there  was  no 
apprehension  that  she  w^ould  ever  repudiate  her  debts. 
If  such  an  apprehension  had  existed,  if  any  member  of 
her  Assembly  or  any  person  of  prominence  had  ex- 
pressed a  doubt  in  regard  to  the  maintenance  of  the 
national  faith,   either   by  failure  in    the    imposition  of 


100 

taxes  or  by  an  issue  of  paper  money  based,  in  the  lan- 
guage of  our  inflationists,  upon  the  "resources  of  the 
nation,"  and  this  doubt  had  obtained  any  considerable 
currency,  the  indemnity  would  not  have  been  paid  to 
this  day.  Never  before  did  I  understand  and  appreciate 
the  importance  and  value  of  high  national  honor  as  I 
did  in  witnessing  the  success  of  the  French  indemnity 
loan.  No  people  understand  better  than  Frenchmen 
that  nothing  is  more  important  to  a  nation  than  credit, 
nothing  more  dangerous  than  the  loss  of  it.  The  idea 
of  repudiation  has  no  lodgment  in  the  French  mind,  and 
this  it  was  which  made  the  indemnity  loans  a  success, 
when  failure  would  have  been  in  the  last  degree  dis- 
astrous. I  should  be  happy  if  I  could  say  that  the  same 
confidence  exists  in  the  obligations  of  the  United  States. 
Why  it  does  not  I  will  explain  hereafter.  The  great  mis- 
take which  France  makes  is  in  not  reducing  her  govern- 
mental expenses  in  times  of  peace.  This  will  be  re- 
ferred to  in  my  next  letter. 

London,  April  lo,  187s - 


Third  Lhttkr. 

To  the  Editor  of  The  Tribune: 

Sir  :  The  traditional  policy  of  our  country — if  a  na- 
tion that  has  not  completed  its  hundredth  year  may  be 
said  to  have  a  traditional  policy — has  been  to  commence 
the  payment  of  its  debt  as  soon  as  the  necessity  which 
created  it  had  passed  away.  The  United  States  was 
born  in  debt,  but  from  the  organization  of  the  Govern- 
ment to  the  present  day  a  national  debt  has  been  re- 
garded by  the  people  as  a  burden  from  which  they 
should  be  relieved  as  rapidly  as  was  possible.  Twice 
since  the  colonies  became  a  nation  the  Government  has 
been  virtually  free  from  debt.  At  one  period  in  its  his- 
tory not  only  was  the  national  debt  entirely  extinguished, 
but  there  was  so  large  an  accumulation  in  the  Treasury, 
arising  almost  exclusively  from  customs  duties,  that  re- 
lief from  the  plethora  could  only  be  found  by  a  distribu- 
tion of  the  surplus  revenue  among  the  States.     If  the 


101 

debt  incurred  in  the  suppression  of  the  rebellion  was 
created  with  extraordinary  rapidity, its  reduction  has  been 
still  more  extraordinary.  The  debt  of  the  United  States 
on  the  I  St  of  September,  1865,  was  $2,757,689,571,  as 
exhibited  by  the  books  of  the  Treasury.  This  was  not, 
however,  the  total  amount  of  the  debt.  There  were  at 
that  time  large  unadjusted  claims  against  the  War  and 
Navy  Departments,  chiefly  against  the  former,  which 
were  paid  by  these  Departments  out  of  their  appropria- 
tions, and  which  have  never  appeared  upon  the  Treas- 
urer's books  as  a  part  of  the  national  debt. 

The  actual  debt  adjusted  and  not  adjusted  at  the  close 
of  the  war,  or  rather  at  the  disbanding  of  the  Federal 
army,  was  not  less  than  $3,000,000,000.  On  the  ist  of 
March  last  it  was  $2,137,315,989,  the  reduction  in  nine- 
and-a-half  years  having  been  $862,684,011,  or  at  the 
rate  of  over  $90,000,000  per  annum.  Nothing  like  this, 
and  nothing  at  all  comparable  to  it,  illustrates  the  finan- 
cial history  of  any  other  nation.  It  is  true  that  the  ex- 
ample of  the  United  States  is  not  being  generally  fol- 
lowed by  other  nations,  but  this  should  not  shake  our 
confidence  in  the  correctness  of  what  I  have  called  our 
traditional  policy.  It  is  more  than  likely  that  the  reduc- 
tion of  the  debt  was  for  some  years  too  rapid,  but  I  am 
satisfied  that  no  judicious  taxation,  the  object  of  which 
is  to  reduce  the  public  debt,  and  which  does  not  affect 
injuriously  the  industrial  interests  of  the  country,  will 
ever  be  regarded  as  burdensome  by  the  people  of  the 
United  States. 

The  Secretary  of  the  Treasury,  in  his  report  of  De- 
cember, 1865.  undoubtedly  gave  expression  to  the  true 
sentiment  of  the  people  when  he  said  : 

The  debt  is  large,  but  if  kept  at  home,  as  it  is  desirable  it 
should  be,  with  a  judicious  system  of  taxation,  it  need  not  be 
oppressive.  It  is,  however,  a  debt.  While  it  is  capital  to  the 
holders  of  the  securities,  it  is  still  a  national  debt  and  an  in- 
cumbrance upon  the  national  estate.  Neither  its  advantages 
nor  its  burdens  are  or  can  be  shared  or  borne  equally  by  the 
people.  Its  influences  are  anti-republican.  It  adds  to  the  power 
of  the  Executive  by  increavSing  Federal  patronage.  It  must  be 
distasteful  to  the  people,  because  it  fills  the  country  with  in- 
formers and  tax  gatherers.  It  is  dangerous  to  the  public  virtue, 
because  it  involves  the  collection  and  disbursement  of  large 
sums  of  money  and  renders  rigid  national  economy  almost  im- 


102 


practicable.  It  is,  in  a  word,  a  national  burden,  and  the  work 
of  removing  it,  no  matter  how  desirable  it  may  be  for  individ- 
ual investment,  should  not  be  postponed.  As  all  true  men  de- 
sire to  leave  to  their  heirs  unincumbered  estates,  so  should  it 
be  the  ambition  of  .the  people  of  the  United  States  to  relieve 
their  descendants  from  this  national  mortgage.  We  need  not 
be  anxious  that  future  generations  should  share  the  burdens 
with  us.  Wars  are  not  at  an  end,  and  posterit}-  will  have  enough 
to  do  to  take  care  of  the  debts  of  their  own  creating. 

And  when  he  further  said  in  his  report  of  1867  : 

Old  debts  are  hard  to  pay;  the  longer  the}-  are  continued  the 
more  odious  do  they  become.  If  the  present  generation  should 
throw  the  burden  of  this  debt  upon  the  next,  it  will  be  quite 
likely  to  be  handed  down  from  one  generation  to  another,  a 
perpetual,  if  not  a  constantly  increasing,  burden  upon  the  peo- 
ple. Our  country  is  full  of  enterprise  and  resources.  With  a 
proper  reduction  in  the  expenses  of  the  Government,  and  with 
a  revenue  system  adapted  to  the  industry  of  the  country  and 
not  oppressing  it,  the  debt  may  be  paid  before  the  expiration 
of  the  present  century.  The  wisdom  of  a  policy  which  shall 
bring  about  such  a  result  is  vindicated  in  advance  by  the  his- 
tory of  nations  whose  people  are  burdened  with  inherited 
debts  and  with  no  prospect  of  relief  for  themselves  or  their 
posterity. 

It  is  to  be  hoped  that  nothing  will  occur  to  change 
the  policy  of  the  Government  inaugurated  at  its  birth 
and  steadily  continued  to  the  present  time.  Admitting 
even  that  it  may  be  neither  needful  nor  desirable  that 
the  national  debt  should  be  entirely  extinguished;  that 
a  certain  amount  of  Government  securities  will  always 
be  required  to  secure  the  circulation  of  the  national 
banks  for  public  and  private  trusts,  etc.,  etc.,  it  will  be 
some  years  before  the  debt  will  be  so  reduced  as  to 
render  it  necessary  to  inquire  what  amount  of  public 
securities  will  be  needed  for  these  purposes,  and  whether 
or  not  the  point  has  been  reached  below  which  the  re- 
duction should  not  be  carried. 

But  while  it  has  always  been  the  policy  of  the  United 
States  to  commence  the  reduction  of  the  public  debt  as 
soon  as  the  exigency  which  brought  it  into  existence 
had  ceased,  a  different  policy  has  been  pursued  and  still 
prevails  among  most  other  nations.  Germany  is  quite 
free  from  debt;  Belgium  and  Holland  are  rapidly  re- 
ducing their  debts,  and  Great  Britain  is  moving  slowly 
(it  is  a  wonder  that  so  wise  a  nation  should  move  so 


103 

slowly)  in  the  same  direction.  Other  nations,  instead  of 
reducing,  are  increasing  their  indebtedness,  and  most  of 
them  will  doubtless  continue  to  do  so  as  long  as  they 
can  borrow.  Until  the  system  of  funding  was  intro- 
duced by  the  Italian  States  the  ability  of  nations  to 
borrow  was  limited,  and  national  debts  were  kept  within 
reasonable  bounds.  Since  the  introduction  of  this  sys- 
tem, which  is  likely  to  prove  to  be  highly  injurious  to 
the  States  that  borrow,  if  not  to  their  creditors,  national 
debts  have  reached  an  enormous  sum — a  sum  which  can 
hardly  be  expressed  in  comprehensible  figures.  The  ag- 
gregate of  these  debts,  exclusive  of  those  of  counties, 
cities,  towns,  etc.,  etc.,  is  upward  of  twenty  thousand  mil- 
lions of  dollars,  four-fifths  of  which  have  been  contracted 
'within  the  present  centur}^  and  this  amount,  vast  and  al- 
most inconceivable  as  it  is, is  being  steadily  increased.  The 
apprehension,  however,  which  the  contemplation  of  this 
aggregate  of  national  indebtedness  naturally  produces 
is  to  some  extent  allayed  by  the  fact  that  in  some — per- 
haps in  most  of  the  heavily  indebted  nations — the  in- 
crease of  income  has  kept  pace  with  ^the  increase  of 
debt ;  in  a  few  instances  it  has  largely  exceeded  it. 
Thus  the  burden  of  the  debt  of  Great  Britain,  that  is  to 
sa}^  the  percentage  of  charge  upon  the  national  income, 
is  less  than  one-third  of  what  it  was  sixty  years  ago, 
and  so  rapidly  has  the  income  of  France  increased  that, 
notwithstanding  her  vastly  augmented  debt,  the  annual 
charge  to  income  is  not  greater  than  when  her  debt  was 
less  than  one-third  of  what  it  is  at  present.  Still  the 
practice  of  borrowing  by  nations,  especially  in  times  of 
peace,  is  a  vicious  and  dangerous  one,  as  there  seems 
to  be  no  reasonable  limit  to  it.  So  great  have  been  the 
accumulations  of  individual  wealth  within  the  present 
century,  particularly  within  the  last  twenty-five  years, 
and  so  numerous  is  the  class  having  money  to  invest, 
that  there  has  been  a  steady  and  constantl}'  increasing 
demand  for  desirable  securities,  and  national  obligations 
have  been  and  still  are  regarded  as  being  of  this  char- 
acter. This  it  is  that  enables  nations  to  borrow,  and 
from  the  ability  to  borrow  arises  the  temptation.  It  is 
more  convenient  for  nations  to  obtain  money  for  the 
supply  of  their  wants  by  loans  than  by  taxation,  and 


104 


wants  arise  when  they  can  be  supplied  in  this  W2.y  which 
otherwise  would  not  exist;  so  all  nations,  or  nearly  all 
nations,  have  become  borrowers,  some  for  one  purpose 
and  some  for  another;  some  for  war  expenses;  some 
for  the  support  of  extravagant  governments;  some  for 
internal  improvements,  and  not  a  few,  it  is  to  be  feared, 
for  the  payment  of  the  interest  on  their  existing  debts — 
rich  nations  at  low  rates,  poor  nations  at  high  rates,  of 
interest.  Borrowing,  indeed,  seems  to  be  an  indication, 
if  it  has  not  become  a  test,  of  advancing  civilisation. 
Japan  has  been  twice  a  borrower  in  London,  and  it  is 
understood  to  be  the  intention  of  China  to  follow  the 
contagious  example  of  her  more  enterprising  neighbor. 

I  have  heard  it  intimated  that  the  existence  of  some 
States  only  became  known  to  the  majority  of  English 
investors  b}^  the  appearance  of  their  loans  on  the  mar- 
ket. Very  little  certainly  could  have  been  known  of 
the  geography,  population,  or  resources  of  some  of  those 
States,  or  their  credit  would  hardly  have  been  so  good 
as  it  has  been.  Honduras,  containing  a  mixed  popula- 
tion of  between  300,000  and  400,000,  and  Costa  Rica 
less  than  half  that  number,  with  small  resources,  and 
those  quite  undeveloped,  have  been,  to  the  sorrow  of 
the  present  holders  of  their  securities,  liberal  borrowers 
in  London.  These  may  be  exceptional  cases,  but  they 
illustrate  what  I  have  said  in  regard  to  the  facility  with 
which  nations  have  been  able  to  borrow. 

London,  April  ig,  187s. 

Note. — In  speaking  of  the  ignorance  that  has  prevailed 
among  investors  in  regard  to  the  geography  of  some  of  the 
borrowing  States,  I  am  reminded  of  an  anecdote  related  to  me 
a  year  or  two  ago  by  a  friend,  who  was  asked  by  a  woman  not 
destitute  of  intelligence,  who  had  been  informed  that  he  was 
an  American  from  New  York,  if  he  knew  her  brother  (men- 
tioning his  name),  who  had  gone  to  live  in  America.  My 
friend  replied  that  he  feared  he  had  not  the  honor  of  her 
brother's  acquaintance,  and  inquired  the  name  of  the  plnce  at 
which  the  brother  was  living.  She  said  she  had  forgotten  the 
name  of  the  place,  but  she  was  quite  sure  that  it  must  be  near 
New  York.  Then,  after  reflecting  a  moment,  she  exclaimed: 
"O,  now  I  recollect  it.  It  was  Venezuela."  One  ought  not  to 
be  surprised  at  the  ignorance  of  this  good  woman  of  the  map 
of  the  western  hemisphere,  when  he  finds  in  a  "geography" 
which  is  in  common  use,  or  which  was  in  common  use  four 
years  ago  in  the  London  schools,  Sitka  included  among  the 
enumerated  half-do^en  chief  cities  in  the  United  States. 


105 

Fourth  Lkttkr. 
To  the  Editor  of  The  Tribune: 

Sir  :  In  a  previous  letter  I  spoke  of  the  debt  of 
France  as  being  larger  than  that  of  any  other  nation. 
It  has  been  stated  b}^  high  authorit}'  that  the  exact 
amount  of  the  debt  of  France  is  unknown.  It  is  very 
certain  that  no  intelligible  statement  has  been  published 
giving  the  precise  character  and  extent  of  her  indebt- 
edness. It  is  currentl}'  reported  that  not  long  ago  the 
French  Ministry  of  Finance  remarked  that  "there  was 
not  a  single  man  in  France  who  could  tell  the  exact 
state  of  the  national  debt."  Enough  is  known,  how- 
ever, to  justify  the  statement  that  it  is  not  only  in  its 
charge  upon  the  State  by  the  higher  interest  it  bears, 
but  also  in  nominal  amount,  considerably  larger  than  the 
debt  of  Great  Britain;  and  it  is  interesting  to  notice 
with  what  rapidity  and  under  what  circumstances  it  has 
grown  to  its  present  magnitude.  Omitting  all  reference 
to  its  increase  and  fluctuations  in  earlier  years,  we  find 
that  at  the  close  of  the  First  Empire,  as  Napoleon  made 
heavy  requisitions  upon  the  States  which  he  had  van- 
quished, it  amounted  only  to  $350,000,000.  While  the 
restored  Bourbons  were  in  power  it  was  doubled.  Dur- 
ing the  Orleans  reign  it  was  considerably  increased,  and 
in  1848,  at  the  commencement  of  the  Second  Republic, 
it  had  risen  to  $900,000,000.  The  Republic  added  $300,- 
000,000  to  it,  and  the  Second  Empire  some  $1,500,000,000 
more.  At  the  outbreak  of  the  Franco-German  war  it 
amounted  to  $2,700,000,000,  and  by  the  expenses  of 
that  war  and  the  payment  of  the  indemnity  it  was  raised, 
including  all  classes  of  indebtedness,  to  an  amount  more 
than  equal  to  twice  the  present  debt  of  the  United  States. 

It  will  be  noticed  that  a  large  part  of  this  increase 
was  during  the  existence  of  the  Second  Empire,  when 
France  was  engaged  in  no  very  expensive  wars,  and 
when  the  country  was  in  a  condition  of  unexampled 
prosperity.  Even  in  years  of  profound  peace,  when  the 
national  income  was  increasing  with  amazing  rapidity, 
the  national  debt  was  increasing  with  almost  equal  rapid- 
ity. Deficits  were  constantly  occurring  at  times  when  the 
Treasury  receipts  ought  to  have  been  largely  in  excess 


lOG 

of  the  public  expenditures.  To  an  American  who 
thoroughU^  approves  the  American  polic}'  it  seems  utterly 
astounding  that  France,  whose  finances  in  other  respects 
have  been  managed  with  singular  abilit}',  should  have 
permitted  her  debt  to  grow  as  it  had  grown,  when  no 
uncontrollable  causes  for  extraordinary  expenses  ex- 
isted, and  when  the  general  condition  of  the  country  was 
unusually  prosperous.  The  explanation  can  only  be 
found  in  the  fact  that  France  when  not  engaged  in  war 
has  been,  as  she  is  now,  preparing  for  war,  and  that  all 
her  previous  existingGovernments,  whether  monarchical, 
imperial,  or  republican,  have  lacked  the  nerve  to  raise 
by  taxation  the  revenues  which  have  been  required  to 
cover  necessary  and  unnecessary  expenditures.  The 
present  Government  has  made  a  good  start  in  the  right 
direction;  whether  or  not  it  has  the  stamina  to  stand 
up  against  the  unpopularity  which  high  taxes  are  sure 
to  produce  remains  to  be  seen. 

The  standing  army  has  been  at  the  bottom  of  all  the 
financial  troubles  in  France,  and  it  is  her  standing  army 
and  the  standing  armies  of  other  countries  that  menace 
the  peace  of  Europe.  It  is  an  absurd  supposition  that 
these  large  and  steadily  increasing  armies  are  necessary 
to  preserve  the  peace.  Nations  are  subject  to  the  same 
influence  as  are  the  individuals  that  compose  them. 
Everybody  knows  that  it  is  the  armed  man  who  is  the 
dangerous  and  aggressive  man,  and  that  in  all  communi- 
ties in  which  arms  are  carried  the  law  is  constantly  vio- 
lated, if,  indeed,  violence  does  not  become  superior  to 
law.  It  is  the  increasing  armies  of  the  leading  military 
powers  of  Europe  which  make  the  public  mind  here 
and  elsewhere  sensitive  and  apprehensive.  These  armies 
are  not  created  for  the  preservation  of  the  peace;  they 
are  the  preparations  for  w^ar;  they  mean  war,  and  noth- 
ing else.  Germany,  the  great  military  power  of  Europe, 
not  only  maintains  a  very  large  and  thoroughly  drilled 
regular  army,  but  she  has  enrolled  all  her  able-bodied 
men,  of  all'  classes  and  conditions,  in  what  may  be 
called  a  well-trained  militia.  France  is  attempting  the 
same  thing;  and  is  it  to  be  supposed  that  Germany  will 
wait  until  France  considers  herself  strong  enough  to  as- 
sume the  offensive  before  she  strikes  again  at  her  old 


107 

enem}^  ?  Is  France  arming  without  the  intention  of  at- 
tempting the  recover}'  of  the  provinces  vShe  has  recently 
lost  ?  Are  Russia  and  Austria  increasing  their  armies 
simply  to  protect  their  own  territories  from  invasion  ? 
The  large  and  increasing  armies  of  continental  nations 
are  not  only  menacing  the  peace  of  Europe,  but  the}' 
are  oppressing  the  people  with  taxes,  and  checking  the 
growth  of  nations  by  withdrawing  millions  of  men  from 
productive  industr}-.  Were  the  armies  which  are  now 
in  preparation  for  war  disbanded,  there  would  be  no 
breaches  of  peace  between  nations,  and  there  would  event- 
ually be  no  national  debts.  A  period  of  peace  is  es- 
peciall}^  needed  by  France,  and  she  would  have  that 
peace  if  she  disbanded  her  army.  "The  Empire  is 
peace,"  was  the  remark  of  the  Third  Napoleon.  What 
a  blessing  it  would  be  to  France,  and  to  civilization 
everywhere,  if  she  would  now  say,  "The  Republic  is 
peace,"  and  verify  the  sa3'ing  b}^  following  the  example 
set  by  the  United  States  at  the  close  of  the  late  civil 
war.  If  she  should  do  so  she  would  shame  every  Eu- 
ropean nation  into  doing  the  same.  France  is  a  rich 
country,  but  there  is  a  limit  to  her  wealth.  She  has 
high  financial  credit,  but  there  must  be  eventually  an 
end  to  her  ability  to  borrow.  United  Germany,  unless 
her  strength  should  be  distracted  b}'  ecclesiastical  ques- 
tions, which  is  not  probable — for  when  the  test  is  ap- 
plied it  will  be  found  that  Catholic  Germans  are  more 
German  than  Catholic — United  Germany,  with  her  free- 
dom from  debt  and  her  full  military  chest,  her  larger 
population,  and  the  greater  submission  to  discipline  of 
her  citizen  soldiers,  will  always  be  more  than  a  match 
for  France  in  war.  France,  indeed,  has  everything  to 
lose  and  nothing  to  gain  by  another  contest  with  Ger- 
many. As  a  military  nation  she  is  not  equal  to  Ger- 
man}^, but  she  is  superior  to  Germany  in  the  excellence 
of  her  soil,  the  variety  of  its  productions,  and  in  the  taste, 
the  skill,  and  refinement  of  her  people.  The  aim  of 
France  should  be  to  excel  all  nations  in  the  arts  of 
peace.  This  she  now  does  to  a  great  extent,  and  she 
would  do  so  in  a  still  greater  degree  if  she  would  forget 
her  triumphs  under  the  great  Corsican,  and  get  over  the 
delusion  which  she  indulges  that  she  must  become  again 
the  great  war  power  of  Europe. 


108 


An  American  on  this  side  of  the  Atlantic  finds  that 
there  is  much  to  be  learned  from  the  older  nations,  but 
he  sees  nothing  to  lessen  his  regard  for  his  own  coun- 
try, or  to  shake  his  belief  that  a  magnificent  future  is 
before  it;  and  there  is  nothing  he  refers  to  with  more 
gratification  and  pride  than  the  facts  that  the  United 
States  has  no  standing  army  and  is  paying  its  debt. 

London,  April  ig,  1875. 


Fifth  Lktter. 
To  the  Editor  of  The  Trilnine : 

Sir:  Absence  from  London  and  other  engagements 
have  prevented  me  from  continuing  for  some  weeks  past 
my  correspondence  with  the  Tribune,  In  my  previous 
letters  I  have  alluded  to  such  facts  in  regard  to  the 
financial  condition  of  France,  the  habits  and  character- 
istics of  her  people,  the  merits  and  faults  of  her  Gov- 
ernment, as  I  have  thought  might  be  interesting  to  your 
readers,  and  perhaps  worthy  of  their  consideration  in 
the  existing  circumstances  of  the  United  States.  In 
this  letter  I  shall  speak  of  our  national  credit. 

The  credit  of  the  United  States,  as  a  nation,  ought  to 
be,  and  but  for  the  facts  to  which  I  shall  allude  would 
be,  equal,  if  not  .superior,  to  that  of  any  other  nation. 
The  United  States  is  not  rich  in  accumulated  wealth; 
no  young  nation  can  be.  The  wealth  of  the  nations  of 
the  Old  World  is  the  result  of  long  years  of  industry  and 
economy,  stimulated  and  protected  by  wise  laws  and 
good  governments,  or  of  a  patient  and  persistent  thrift 
that  has  created  wealth  in  spite  of  unwise  laws  and  bad 
governments.  The  United  States  is  not  a  rich  nation, 
but  she  possesses  the  means  of  becoming  so,  and  she 
will  in  time  become  the  richest  nation  in  the  world. 
Many  a  hard  lesson  must,  however,  be  learned  by  the 
people  from  experience,  the  severest  and  most  thorough 
of  all  teachers,  before  this  will  be  accomplished.  But 
although  the  United  States  is  not  rich  in  accumulated 
wealth,  there  are  the  best  of  reasons  why  the  national 
credit  should  be  exceptionall}^  high.     I  will  briefly  state 


109 

them,  and  then  refer  to  the  causes  which  have  pre- 
vented it  from  being  so: 

First.  The  United  States  is  more  rapidly  increasing 
in  population  than  any  other  country,  and  her  inhabi- 
tants are  not  excelled,  if  they  are  equaled,  in  energy, 
inventive  talent,  intelligence  and  personal  independence. 

Secondly.  There  is  no  country  possessing  a  more  ex- 
cellent soil;  none  so  rich  in  minerals;  none  that  can 
successfully  compete  with  her  in  the  production  of  arti- 
cles of  prime  necessity. 

Thirdly.  Notwithstanding  a  somewhat  free  expendi- 
ture of  the  public  money,  the  Government  of  the  United 
States,  burdened  by  no  standing  army  or  expensive 
navy,  is,  in  comparison  with  that  of  other  great  nations, 
economically  administered. 

Fourthly.  The  traditional  policy  of  steadil}^  reducing 
the  public  debt  is  being  persistently  adhered  to,  under 
circumstances  which  render  this  almost  exceptional  na- 
tional policy  in  the  highest  degree  creditable. 

Regarding  the  United  States  in  these  particulars  alone, 
the  conclusion  would  be  irresistible  that  the  national 
credit  ought  to  be  of  the  very  highest  character.  That 
it  is  not  is  attributable  mainly  to  two  causes  : 

First.  To  the  default  of  the  States. 

Secondly.  To  the  apprehension  which  exists  in  the 
minds  of  many  capitalists  and  small  investors  (an  appre- 
hension that  will  never  entirely  cease  as  long  as  an  un- 
redeemable and  depreciated  currency  is  maintained  by 
the  Government)  that  the  United  States  bonds  may  be 
called  in  and  paid  in  legal-tender  notes. 

In  this  letter  I  shall  speak  of  the  defaulting  States. 
It  is  true  that  American  credit  has  suffered  by  the  failure 
of  so  many  of  our  railroad  companies  as  have  within 
the  last  two  years  ''gone  by  the  board,"  entailing  im- 
mense losses  upon  the  holders  of  their  bonds;  but  these 
failures  have  had  altogether  less  influence  in  shaking 
the  confidence  of  men  w^ho  look  beyond  the  mere  ques- 
tion of  pecuniary  loss,  in  American  credit  and  Ameri- 
can character,  than  the  default  of  the  States. 

The  Government  of  the  United  States  is  not  only 
peculiar  in  its  republican  and  somewhat  democratic 
features,  but  in  the  fact  that  it  embraces  within  itself 


110 


States  with  many  of  the  powers  and  immunities  of  sov- 
ereignty. This  feature  of  our  complex  system  is  only 
imperfectl}^  understood  by  even  intelligent  foreigners — 
it  is  in  fact  understood  onh^  by  the  very  few  who  have 
made  the  Constitution  of  the  United  States  a  study.  To 
a  large  majority  of  investors  it  is  utterly  unintelligible. 
That  a  State  should  have  the  power  to  contract  debts, 
be  able  to  shield  itself  against  prosecution  for  the  non- 
fulfilment  of  its  obligations  by  sovereignt\^  and  at  the 
same  time  be  so  situated  as  to  avoid  the  responsibility  to 
which  it  might  be  held  by  the  laws  of  nations  if  it  were 
independent^  is  so  novel  a  feature  in  a  national  organiza- 
tion that  it  is  not  strange  that  it  should  not  be  readily 
comprehended ;  nor  that  repudiation  or  default  by  a  State 
should  affect  injuriously  the  credit  of  the  nation  of  which 
it  forms  a  part. 

"  Why  should  a  nation  be  trustworthy  when  the  vStates 
that  compose  it  have  shown  themselves  to  be  untrust- 
worthy ?' '  '  *What  assurances  have  we  that  your  Federal 
Government,  as  you  call  it,  will,  under  all  circumstances, 
be  faithful  to  its  obligations  while  so  many  of  the  States 
of  which  it  is  made  up  are  unfaithful  to  theirs?" 

Such  are  the  questions  which  the  holders  of  dishon- 
ored State  obligations  are  apt  to  put  to  Americans  when 
the  credit  of  the  Government  is  being  discussed,  and 
they  are  questions  wdiich  are  not  easily  answered  to  the 
satisfaction,  at  least,  of  the  questioners.  Now,  as  ver^- 
few  of  the  holders  of  these  dishonored  State  obliga- 
tions are  disposed  to  invest  in  any  kind  of  American  se- 
curities, and  as  these  holders  are  numerous  and  each 
has  some  friends  whom  he  influences,  it  will  be  readily 
perceived  how  much  smaller  must  be  the  number  of 
purchasers  of  Government  bonds  than  it  would  be  if  all 
the  States  had  kept  faith  with  their  creditors.  Omitting 
all  mention  of  the  States  which  are  doing  nothing,  and 
which  are  not  proposing  to  do  anj^thing,  toward  paying 
their  debts,  I  shall  refer  to  two  cases  to  which  my  at- 
tention has  been  called,  in  addition  to  that  general  dis- 
credit which  attaches  to  nearly  all  the  States  by  reason 
of  their  paying  in  currency  the  interest  which  ought  to 
be  paid  in  coin.  The  cases  to  which  I  shall  especially 
refer  are  those  of  Indiana  and  Virginia. 


Ill 

Since  I  have  been  in  lyondon  I  have  been  frequently 
and  painfully  reminded  of  the  fact — a  fact  that  I  had 
almost  forgotten — that  a  considerable  amount  of  the  old 
internal  improvement  bonds  of  my  own  State  are  still 
outstanding.  It  is  only  a  few  days  since  an  old  gentle- 
man called  upon  me  with  some  United  States  railroad 
bonds  which  had  matured,  and  which  he  desired  to  have 
cashed  or  forwarded  for  collection.  "These,"  said  he, 
as  he  handed  me  the  bonds,  "  when  paid,  will  close  my 
connection  with  the  United  States.  I  have  been  cheated 
out  of  one-half  of  what  one  State  owes  me,  and  I  do  not 
intend  to  be  cheated  again  in  the  same  quarter."  Inquir- 
ing by  what  State  he  had  been  cheated,  my  State  pride 
w^as  not  especially  gratified  when  he  answered  "by  the 
State  of  Indiana."  He  had  purchased,  some  forty  years 
ago,  $20,000  of  Indiana  bonds  at  par.  After  waiting  for 
many  years  (the  State  having  defaulted  soon  after  the 
bonds  were  issued),  he  had  received  one-half  the  amount 
in  new  bonds,  less  his  proportion  of  the  expenses,  to 
which  the  bond  holders  were  subjected  in  their  efforts 
to  obtain  a  satisfactory  recognition  of  their  claims,  and 
an  interest  in  the  Wabash  and  Erie  Canal  for  the  other 
half.  A  new  generation  has  come  upon  the  stage  since 
Indiana  compromised  with  her  creditors,  and  it  is  likely 
that  a  majority  of  her  citizens  are  quite  unconscious  of 
the  fact  that  her  credit  was  ever  even  impaired;  if  they 
are  not,  it  is  because  the  Legislature  has  been  from  time 
to  time  importuned  to  take  back  the  canal  and  return  to 
her  creditors  the  amount  which  it  represented  when  the 
compromise  was  effected.  The  bond  holders  or  their  de- 
scendants have  not,  however,  forgotten  it,  and  one  can- 
not be  long  in  London  without  hearing  Indiana  included 
among  the  defaulting  States.  The  facts  in  regard  to  the 
default  of  the  State  and  her  compromise  with  her  credi- 
tors are  not  definitely  impressed  upon  my  memory,  but 
they  were,  I  think,  substantially  these:  In  1835  and  1836 
the  State,  in  common  with  many  other  States,  undertook 
a  vast  scheme  of  internal  improvements.  Speculation 
was  rife,  money  was  abundant,  the  credit  of  the  State 
was  good,  and  she  borrowed  liberally.  Very  little  pro- 
gress had,  however,  been  made  in  the  construction  of 
the  works,  which  had  begun  in  all  parts  of  the  State, 


112 


when  the  collapse  of  1837  occurred,  which  put  a  sudden 
stop  to  all  these  enterprises,  and  also  to  the  payment  of 
the  interest  on  the  bonds  which  had  been  issued.  For 
a  number  of  years  no  payment  was  made  to  the  bond 
holders.  Various  expedients  were  resorted  to  by  the 
Legislature  for  the  payment  of  what  was  called  the 
"floating  debt"  of  the  State,  but  nothing  was  done  to- 
ward the  payment  of  interest  on  her  bonds.  In  the 
meantime  the  bonds  were  sadly  depreciated,  and  by 
many  holders  they  were  regarded  as  being  virtually  re- 
pudiated. Gradually  the  State  recovered  from  her  em- 
barrassments, and  some  six  or  seven  years  after  the  de- 
fault occurred,  a  strong  pressure  having  been  made  upon 
the  Legislature,  a  bill  w^as  passed  by  which  the  State 
agreed  to  issue  new  bonds  for  one-half  the  old  ones,  and 
for  the  other  half,  to  transfer  to  trustees  for  the  benefit 
of  the  bond  holders  the  Wabash  and  Erie  Canal,  to- 
gether with  the  lands  which  had  been  given  by  the 
Government  for  its  construction  which  had  not  been 
sold,  and  the  balance  due  on  the  lands  wdiich  had  been 
disposed  of.  This  transfer  of  the  canal  and  canal  lands 
was  subject  to  a  condition  that  the  canal,  then  com- 
pleted from  the  Ohio  line  to  Lafayette,  should  be  ex- 
tended to  the  Ohio  river,  the  cost  of  which  extension 
exhausted  the  lands  and  the  cash  balance  due  thereon, 
leaving  to  the  bond  holders  the  canal  alone  for  one-half 
the  amount  due  to  them.  The  canal,  never,  in  fact,  a 
valuable  property,  became  subsequently  absolutel}' 
worthless  by  the  construction  of  the  Wabash  Valley  Rail- 
road and  other  roads,  which  were  built  by  the  authority 
of  the  State.  To  this  compromise  the  foreign  bond 
holders  may  have  been  parties,  but  it  w^as,  they  say,  a 
compromise  virtually  forced  upon  them  by  the  relations 
which  existed  between  them  and  their  debtor.  The 
State  was  sovereign.  It  could  not  be  sued  in  the  courts. 
It  was  protected  by  the  Federal  Government  from  be- 
ing in  any  manner  held  responsible  by  the  nation  whose 
citizens  were  the  holders  of  its  obligations.  Her  credi- 
tors must  either  accept  what  was  tendered  or,  as  it 
seemed  to  them,  run  the  risk  of  losing  their  entire  debt. 
The  proposition  was  considered  a  fair  one  by  the  State, 
and  it  was  generally  accepted  by  the  bond  holders.  There 


118 


are,  however,  I  understand,  some  of  her  bond  holders 
who,  being  unwilling  to  avail  themselves  of  the  terms 
of  the  compromise,  have  never  received  anything  on 
their  bonds.  Many  years,  as  has  been  said,  have 
elapsed  since  this  compromise  took  place,  and  I  do  not 
undertake  to  state  the  facts  in  regard  to  it  with  pre- 
cision. It  is,  indeed,  about  the  only  important  fact  in 
the  history  of  Indiana  which  her  sons  cannot  think  of, 
as  things  have  turned  out,  with  satisfaction,  and  which 
they  would  be  glad  to  forget.  It  is  enough  to  say  that 
a  considerable  amount  of  her  bonds,  for  which  she  re- 
ceived full  consideration,  remain  unpaid  through  no 
fault  of  their  holders.  Since  she  compromised  with  her 
creditors  she  has  become  prosperous  and  rich — one  of 
the  most  prosperous  and  richest  States  in  the  Union. 
She  could  take  up  these  obligations  without  adding  per- 
ceptibly to  the  burden  of  her  tax-payers.  That  the 
property  transferred  to  the  bond  holders  in  payment  of  a 
part  of  their  debt  has  become  valueless,  mainly  by  the 
construction  of  railroads  which,  built  under  the  author- 
ity of  the  State,  have  added  largely  to  her  wealth,  can- 
not be  questioned.  What  ought  to  be  done  is  very  clear 
to  my  mind,  but  I  am  not  in  a  situation  to  be  an  adviser. 
I  am  merely  explaining  why  it  is  that  our  national  credit 
is  not  so  high  as  it  ought  to  be. 
London,  June  2,  1873. 


Sixth  Letter. 
To  the  Editor  of  The  Tribune  : 

Sir  :  Prior  to  1861  the  credit  of  no  State  in  the  Union 
was  better  in  England  than  that  of  Virginia,  and  she 
had  availed  herself  of  that  credit  to  a  liberal  extent 
for  the  construction  of  works  which  she  was  unable  to 
construct  without  borrowing,  and  which  were  greatly 
needed  for  the  development  of  her  almost  boundless  re- 
sources. Relations  of  an  especially  cordial  nature  had 
always  existed  between  the  people  of  England  and  the 
people  of  Virginia.  One  part  of  what  subsequently  be- 
came the  United  States  had  been  settled  by  the  Puri- 
tans, another  by  the  Dutch,  another  by  the  Quakers  and 


114 

Germans;  here  the  Spaniards  and  there  the  I^rench  had 
attempted  to  colonize;  Virginia  alone  was  settled  by  the 
English,  who  named  the  colony  in  honor  of  England's 
maiden    Queen.     Virginia   was    especially    an    English 
colony,  and  up  to  the  Revolution  it  was  the  "  pet  col- 
ony "  of  the  English  aristocracy.     The  Revolution,  al- 
though it  severed  the  political  ties,  did  not  sever  the 
social  ties  that  bound  her  to  the  Mother  Country.     The 
people  of  Virginia,  in  their  habits  and  tastes,  in  their 
domestic  economy,  and  even  in  their  forms  of  religious 
worship,   were    pre-eminently    English;    and    although 
none   of  the    colonists  were  more    outspoken   and  elo- 
quent in  their  denunciations  of  the   aggressions  of  the 
throne  than  were  her  fearless  and    eloquent   sons;    al- 
though no  soldiers  were  braver  or  more  determined  and 
persistent  in  their  resistance  to  British  power  than  those 
which  she  sent  to  the  field  with  Washington  at  their 
head,  there  has  always  existed  a  stronger  attachment  on 
the  part  of  the   ruling  classes  in   England  to  Virginia 
than  to  any  other  vState. 

It  was  doubtless  owing  to  this  fact  that  large  amounts 
of  Virginia  bonds  were  purchased  by  English  investors. 
During  the  late  civil  war  the  payment  of  interest  on  her 
bonds  was  suspended,  and  as  she  was  known  to  have 
been  the  great  battle-field  of  the  war,  and  to  have  been 
terribly  devastated  by  both  the  Federal  and  Confederate 
armies,  the  English  holders  of  her  bonds  waited  pa- 
tiently for  a  number  of  years  for  the  resumption  of  in- 
terest payments.  They  knew  that  she  was  a  great 
State,  lying  upon  the  ocean,  penetrated  by  noble  rivers, 
with  a  genial  climate,  and  abundant  natural  resources; 
but  they  knew  also  that  her  means  had  been  wasted  by 
the  protracted  war;  and  relying  upon  her  recuperative 
power  and  her  faith,  they  hesitated  for  a  long  period  to 
urge  the  payment  of  their  claims.  At  length,  when  for- 
bearance seemed  no  longer  a  duty,  co-operating  with 
other  creditors,  they  asked  that  payment  should  be  no 
longer  delayed,  and  negotiations  were  entered  into  be- 
tween the  representatives  of  the  bond  holders  and  the 
representatives  of  the  State,  which  resulted  in  the  pass- 
age by  the  General  Assembly  of  what  is  known  as  the 
Funding  Act.     By  this  act  the  officers  of  the  State  were 


i 


115 


authorized  to  issue  uew  bouds,  the  interest  on  which 
should  be  receivable  for  taxes  for  two-thirds  of  the 
principal  and  accrued  interest  of  the  old  ones,  and  cer- 
tificates for  the  other  third.  These  certificates  repre- 
sented what  was  regarded  by  the  General  Assembly  as 
the  part  of  the  State  debt  which  ought  in  justice  to  be 
assumed  by  West  Virginia,  which  had  been  carved  out 
of  the  Old  Dominion  soon  after  the  commencement  of 
the  war,  but  as  the  new  State  had  declined  to  acknowl- 
edge any  obligation  to  assume  the  payment  of  any  por- 
tion of  the  State  debt  on  the  ground  that  no  part  of  the 
public  works,  for  the  construction  of  which  the  debt 
had  been  contracted,  was  included  within  her  bound- 
aries, these  certificates  were  considered  both  by  Vir- 
ginia and  the  creditors  who  were  to  receive  them  in  sat- 
isfaction of  one-third  part  of  their  claims  as  being  of  but 
little  value. 

This  compromise,  although  not  regarded  with  favor 
by  a  majority  of  English  creditors,  was  nevertheless 
accepted  b}-  them  as  a  definite  settlement  of  their  claims, 
and  one  which,  under  the  circumstances,  was  not  dis- 
creditable to  the  State.  As  soon  as  the  provisions  of 
the  act  and  the  ways  and  means  of  proceeding  under  it 
were  understood,  the  work  of  forwarding  their  bonds 
for  conversion,  although  it  was  attended  with  consider- 
able trouble  and  expense,  w^as  commenced  and  continued 
by  the  holders  until  the  next  session  of  the  General  As- 
sembly, when  a  considerable  amount  being  in  transitu, 
some  two-thirds  only  of  the  bonds  having  been  funded, 
that  part  of  the  Funding  Act  which  authorized  the  issue 
of  bonds,  the  coupons  of  which  were  to  be  receivable 
for  taxes,  was  promptly  repealed,  and  funding  was  vir- 
tually suspended.  At  the  same  time  the  officers  of  the 
State  were  prohibited  from  receiving  in  payment  of 
taxes  the  coupons  which  upon  their  face  were  expressly 
made  receivable  for  taxes,  nor  were  they  so  received 
until  after  the  courts  of  the  State  had  decided  that  they 
were  issued  under  a  contract  between  the  State  and  the 
bond  holders,  which  the  Legislature  had  no  right  to  re- 
scind. The  result  is  that  the  State  has  two  classes  of 
creditor  bond  holders  instead  of  one,  the  larger  class 
holding  bonds  the  coupons  of  which  are  receivable  for 


116 

taxes,  but  are  not  cashed  at  the  Treasury;  the 
smaller  class  holding  bonds  the  coupons  of  which 
are  not  receivable  for  taxes,  and  on  which  nothing 
is  being  paid.  Of  course,  all  parties  are  dissatisfied. 
The  State  is  dissatisfied  because  a  part  of  her  creditors 
stand  on  a  different  footing  from  the  others;  the  holders 
of  the  tax-receivable  coupons  are  dissatisfied  because, 
as  the  coupons  which  they  hold  are  only  available  to 
tax-payers,  they  are  compelled  to  part  with  them  at  a 
heavy  discount;  the  holders  of  the  bonds  the  coupons 
of  which  are  not  receivable  for  taxes  are  not  only  dis- 
satisfied, but  they  are  indignant  at  the  injustice  to  which 
they  are  being  subjected  in  receiving  nothing,  while 
other  creditors,  more  active  and  vigilant,  perhaps,  cer- 
tainly more  fortunate  than  themselves,  are  being  partially 
paid.  Virginia  is  in  many  important  respects  one  of 
the  most  inviting  States  in  the  Union  to  the  better  class 
of  English  emigrants,  but  this  class  will  be  repelled 
from  her  borders  so  long  as  she  fails  to  make  a  satisfac- 
tory arrangement  with  her  dissatisfied  creditors.  Look- 
ing only  to  the  question  in  a  pecuniary  point  of  view, 
aside  entirely  from  the  moral  obligations  which  she  is 
under  to  her  creditors,  Virginia  is  making  a  capital  mis- 
take in  permitting  her  former  good  name  to  be  thus  tar- 
nished in  the  house  of  her  friends.  No  State  is  in 
greater  need  of  emigration  and  capital,  and  these  will 
go  to  her  very  slowly  as  long  as  she  can  be  justly  charged 
with  unfaithfulness  to  her  engagements. 

I  have  spoken  of  Indiana  in  my  last  letter,  and  of 
Virginia  at  this  time,  because  the  former  is  the  only  one 
of  the  Northern  States,  if  I  am  not  misinformed,  whose 
matured  obligations  have  not  been  redeemed  in  full,  and 
because  the  latter  is  one  of  the  most  prominent  of  the 
Southern  States,  and  because  her  dealing  with  her  cred- 
itors have,  as  has  been  stated,  created  more  distrust  of 
American  legislation  and  American  credit  than  the 
course  of  any  other  single  State.  I  say  this  from  no 
unfriendly  feeling  toward  Virginia,  for  I  have  the  sin- 
cerest  regard  for  her.  No  American  ever  forgets  that 
to  Virginia  is  the  United  States  indebted  for  Patrick 
Henry,  for  the  Randolphs,  the  Lees,  for  Jefferson  and 
Madison,  and  other  illustrious  names  which  adorn  her 


Hi 

history.  No  reader  of  that  history  anywhere  forgets 
that  to  Virginia  is  the  world  indebted  for  Washington. 
She  is  still  a  great  State,  with  capabilities  of  becoming 
again  one  of  the  foremost  in  the  Union.  The  first  de- 
cided step  for  her  to  take  in  this  direction  is  the  restora- 
tion of  her  credit  by  an  honorable  settlement  with  her 
creditors.     This  step,  I  trust,  she  will  speedily  take. 

Here  I  should  be  glad  to  stop,  but  I  regret  to  be 
under  the  necessity  of  saying  that  it  is  not  the  course 
which  has  been  pursued  by  Indiana  and  Virginia,  nor  is  it 
the  continued  default  of  most  of  the  Southern  States,  that 
has  excited  the  gravest  apprehensions  of  the  more 
thoughtful  Europeans  in  regard  to  American  credit. 
What  has  wounded  that  credit  the  most  deeply  is  the  fact 
that,  availing  themselves  of  the  provisions  of  the  Legal- 
Tender  Act,  all  of  the  indebted  States  which  have  paid  at 
all,  with  the  exception  of  Massachusetts  and  California, 
have,  since  the  passage  of  that  act,  paid  in  a  depreciated 
currency  the  debts  which,  in  common  honesty,  should 
only  have  been  paid  in  coin  or  its  equivalent.  This  par- 
tial repudiation  by  some  of  the  richest  States  in  the 
Union  I  shall  refer  to  especially  in  my  next  letter. 


Skventh  Letter. 
To  the  Editor  of  The  Tribune  : 

Sir  :  Nothing  in  our  history,  or  perhaps  in  the  history 
of  au}^  country,  has  ever,  to  so  great  a  degree,  surprised 
the  military  men  and  the  statesmen  of  Europe  as  the 
manner  in  which  our  great  army  of  the  United  States 
was  disbanded  at  the  close  of  the  late  civil  war.  Noth- 
ing certainly  has  to  such  an  extent  commanded  the 
admiration  of  European  financiers  as  the  commence- 
ment and  persistent  reduction  of  her  national  debt.  That 
nearly  a  million  of  men,  a  large  part  of  whom  had  been 
long  enough  in  the  field  to  acquire  a  love  of  military 
life,  should,  when  their  work  had  been  finished,  go  back 
to  their  homes  willingly,  peaceably,  without  a  single  in- 
stance of  violence  or  disturbance,  to  resume  their  former 


lis 


occupations;  that  a  nation  impoverished — for  I  think 
we  have  now  come  to  a  realizing  sense  of  the  fact 
that  two-thirds  of  the  States  could  not  for  four  years  be 
engaged  in  subduing  and  devastating  the  other  third 
without  being  impoverished,  no  matter  what  stimulus 
the  war  might  have  given  to  many  branches  of  industry 
or  what  apparent  prosperity'  might  have  been  created  b}' 
a  redundant  currenc}' — that  a  nation  impoverished  by 
one  of  the  severest,  bloodiest,  and  most  expensive  con- 
tests that  has  ever  been  waged  should  almost  before 
the  smoke  had  been  lifted  from  the  battle-field  begin 
the  payment  of  her  debt,  are  facts  that  have  commanded 
the  admiration  of  militarj^  men,  statesmen,  and  finan- 
ciers throughout  Europe.  Do  not  these  facts  indicate 
the  excellence  of  republican  institutions,  and  the  power, 
the  uprightness,  and  the  practical  good  sense  of  a  self- 
governed  people?  What  will  the  great  Republic  do 
with  its  army  now  that  the  rebellion  has  been  subdued? 
What  will  a  people,  every  man  of  whom  is  a  voter,  do 
with  their  vast  debt  when  the  question  of  taxation  for 
its  payment  has  to  be  calmly  considered  ?  were  questions 
which  one  might  have  heard  asked — tauntingh'  by  our 
enemies,  doubtfully  by  our  friends — in  military,  politi- 
cal, and  financial  European  circles  in  the  spring  of  1865. 
One  of  these  questions  has  been  definitely  answered  ; 
the  other  is  in  a  fair  way  of  being  so.  The  army  of  the 
United  States  is  now  a  police  force,  sufQcient  merely 
for  the  protection  of  the  frontier  settlements  against  the 
scattered  Indian  tribes  which  still  have  a  precarious  ex- 
istence in  theWestern  Territories — a  police  force  scarcel}^ 
more  numerous  or  extensive  than  that  of  a  single  cit}- 
of  L,ondon.  The  debt — three  thousand  millions  of  dol- 
lars in  1865 — will  virtually  disappear  with  the  present 
century.  The  non-existence  of  a  standing  army  in  the 
United  States  makes  liberal-minded  men  everywhere 
hopeful  in  regard  to  the  capacity  of  men  for  self-gov- 
ernment, and  causes  millions  in  Europe  to  "  look  across 
the  sea"  for  a  refuge  against  subjection  to  military 
duty,  while  the  steady  reduction  of  the  national  debt 
gives  inves'tors  confidence  in  the  national  integrity. 

The  question   then  arises.  How  happens  it  that  the 
national  credit  is  not  higher  than  it  is  ?     Why  is  it  not. 


119 


as  it  ought  to  be,  higher  than  that  of  any  other  nation  ? 

I  answer,  it  is  mainly  because  the  States  have  not  kept 
faith  with  their  creditors.  The  losses  which  within  the 
last  two  years  have  been  sustained  by  European  inves- 
tors through  the  failure  of  railroad  companies  in  the 
United  States  have  been  enormous  and  distressing,  but 
private  companies  fail  on  this  side  of  the  Atlantic  as 
well  as  on  the  other.  So  far,  I  do  not  understand  that 
any  of  our  private  companies  have  attempted  to  repudi- 
ate their  debts.  If  they  had  the  disposition  to  do  so, 
they  could  not.  They  can  be  reached  through  the 
courts,  and  there  has  been  no  lack  of  fidelity  on  the 
part  of  our  judges  in  holding  corporations  to  their  engage- 
ments. It  is  not  corporations,  but  States,  which  lie 
under  the  stigma  of  repudiation.  The  failure  of  railroad 
companies  is  undoubtedl3Mvhat,  just  now,  most  severely 
troubles  investors  and  prevents  the  success  of  all  loans 
except  those  which  are  offered  b}'  well  known  and  divi- 
dend-paying corporations;  but  such  failures  create  in 
the  minds  of  far-seeing  and  thoughtful  men  no  distrust 
of  American  credit  comparable  with  that  which  is 
created  by  the  bad  faith  of  sovereign  States. 

Europeans,  especially  Englishmen,  deal  liberally  with 
insolvency.  There  is  no  country  in  the  world  in  which 
an  honest  insolvent  debtor  finds  less  difficult5Mn  "ar- 
ranging" his  debts  than  in  England.  His  creditors  ask 
only  that  he  shall  pay  what  he  can,  and  this  having 
been  done,  he  can  start  again,  relieved  of  his  burdens. 
Englishmen  are  tolerant  of  insolvency,  but  there  are  no 
words  in  their  language  strong  enough  to  express  their 
detestation  of  repudiation.  It  is  the  repudiation,  ab- 
solute or  partial,  by  many  of  the  States  which  casts  a 
dark  shadow  over  American  credit  and  compels  the 
Government  to  pay  six  per  cent,  interest  instead  of  four 
on  a  large  portion  of  its  debt.  Fortunateh^  the  number 
of  those  wiio  hold  bonds  of  States  which  have  not  kept 
faith  with  their  creditors  is  not  in  Europe  very  large, 
but  it  is  large  enough  to  diminish  seriously  the  demand 
for  the  bonds  of  the  Government.  A  majority  of  Euro- 
pean investors  have  entire  faith  in  the  integrity  of  the 
United  States  as  a  nation.  They  know  what  the  Fed- 
eral Government  has  done   in  times  past.     They  know 


120 


that  in  the  darkest  days  of  the  war,  and  just  at  its  close, 
when  the  debt  seemed  overwhelming,  it  paid  in  coin 
large  amounts  of  bonds  which  had  matured,  although 
the  temptation  to  extend  them  was  difficult  to  be  re- 
sisted, and  they  doubt  not  that  a  credit  which  has  been 
maintained  under  circumstances  the  most  trying  will  be 
maintained  to  the  end.  If  to  the  investors  who  have 
this  faith  in  the  Government  could  be  added  those  who 
are  suffering  by  being  holders  of  bonds  of  States  which 
are  wholly  or  partially  in  default,  and  who  in  conse- 
quence turn  their  backs  upon  everything  American,  and 
those  who  judge  the  nation  by  its  components,  competi- 
tion among  bu3'ers  would  be  largely  increased,  funding 
would  not  languish  as  it  now  does,  and  the  burden  of 
the  debt,  by  a  reduction  of  interest,  would  be  speedil}^ 
diminished. 

That  many  of  the  States  in  their  dealings  with  their 
creditors  have  behaved  badly  is  undeniable.  Let  us 
look  at  their  action  from  the  European  point  of  view. 
We  are  an  isolated  people.  With  the  exception  of 
Canada,  which  has  little  influence  over  us,  we  have  no 
neighbors,  and  consequently  we  do  not  feel  the  influ- 
ences which  nations  in  close  proximity  exert  upon  one 
another.  We  have  not  as  fully  realised  the  weight  of 
the  obligations  that  rest  upon  Americans  as  citizens  of 
States  as  we  have  of  those  which  rest  upon  them  as  citi- 
zens of  the  great  Republic.  We  have  not  carefully 
considered  what  must  be  the  effect  upon  the  European 
mind  of  the  failure  of  States  to  meet  their  engagements. 

A  State  can  no  more  impair  by  legislation  the  obligation  of 
its  own  contract  than  it  can  impair  the  obligation  of  the  con- 
tract of  individuals.  We  naturally  look  to  the  action  of  a  sov- 
ereign State  to  be  characterized  by  a  more  scrupulous  regard 
to  justice  and  a  higher  morality  than  belong  to  the  ordinary 
transactions  of  individuals. 

Such  were  the  words  of  Justice  McLean,  a  man  alike 
distinguished  for  his  high  sense  of  honor  and  his  pro- 
found legal  learning,  in  delivering  the  opinion  of  the 
Supreme  Court  of  the  United  States  in  a  case  which  in- 
volved the  authority  of  a  State  to  annul  its  contracts — 
words  that  ought  to  be  engraved  upon  the  walls  of  every 
State-house  in  the  Union. 


121 

Now,  while  a  State  can  no  more  impair  by  legislation 
the  obligation  of  its  own  contracts  than  it  can  impair 
the  obligation  of  the  contract  of  individuals,  it  can,  it 
seems,  not  only  impair,  but  it  can  violate  and  virtually 
annul  its  contracts  by  refusing  to  observe  them.  For- 
tunately for  Judge  McLean,  he  "went  to  his  reward" 
without  witnessing  what  has  since  been  done  with  legal 
impunity  under  the  form  of  government  which  he  so 
greatly  admired.  A  State  cannot,  under  the  Constitu- 
tion of  the  United  States,  invalidate  its  obligations,  but 
it  can  lessen  the  value  of  those  obligations  or  render 
them  a  dead  letter  by  simply  ignoring  them,  partially  or 
altogether,  and  relying  upon  its  sovereignty  for  its  pro- 
tection against  their  enforcement,  and  this  is  being  done 
by  many  of  the  States.  They  do  not  undertake,  by  laws 
of  their  own  making,  to  annul  their  contracts;  this  they 
are  prohibited  from  doing  by  the  fundamental  law  of 
the  Federal  Government.  They  do  not,  for  instance, 
repudiate  their  debts  by  making  laws  for  their  abroga- 
tion, but  they  render  these  obligations  valueless,  wholly 
or  in  part,  according  to  their  own  good  pleasure,  by  de- 
clining to  fulfil  them.  The  State  of  Virginia  having, 
under  an  agreement  with  her  creditors,  issued  new 
bonds — the  coupons  of  which  were  to  be  receivable  for 
taxes — for  two-thirds  of  the  amount  of  the  old  ones,  is 
compelled  to  adhere  to  her  agreement  and  to  receive 
these  coupons  from  her  tax-payers,  but  she  can  reduce 
their  value  by  taxing  them,  and  she  might  render  them 
as  worthless  as  waste  paper  by  simply  declining  to  levy 
taxes.  Now,  what  confounds  foreigners  is  the  fact  that 
while  the  Supreme  Court  of  the  United  States  must 
pronounce  invalid  all  acts  of  States  which  impair,  or 
rather  are  intended  to  impair,  the  binding  obligation  of 
their  own  contracts,  it  has  no  power  to  compel  the  per- 
formance of  these  contracts;  that  while  no  State  can 
make  valid  laws  for  the  repudiation  of  its  debts,  there 
is  no  power  outside  of  itself  that  can  enforce  an  observ- 
ance of  its  faith.      SoyerKigntiks  within  a  sover- 

EIGNTY ! 

Ought  we  to  be  surprised  that  foreigners  are  perplexed 
by  this  peculiarity  of  our  political  fabric,  and  confounded, 
if  not  disgusted,  by  the  contradictions  and  injustice  that 


122 


result  from  it?  The  sovereignty  of  the  States  prevents 
an  enforcement  of  their  obligations,  and  this  it  was  that 
made  so  appropriate  and  truthful  the  remark  of  one  of 
our  eminent  and  high-minded  jurists: 

//  is  expected  that  the  action  of  a  sovereign  State  will  he  char- 
acterized by  a  more  scrupiilons  regard  to  justice  and  by  a  higher 
sense  of  morality  than  belongs  to  the  ordinary  transactions  of  in- 
dividnals. 

The  creditors  of  the  States  have  nothing  to  rely  upon 
for  the  fulfilment  of  their  obligations  but  their  integrity 
and  their  honor;  these,  therefore,  should  be  observed 
with  the  strictest  fidelity — in  spirit  and  letter.  Are  the}^ 
so  observed,  I  will  not  say  by  the  States  that  are  paying 
nothing — pleading  inability  to  pay  by  reason  of  the 
effects  of  the  war  upon  their  resources  as  an  excuse  for 
not  trying  to  do  anything  for  their  creditors — but  are 
they  so  observed  by  States  that  have  no  such  excuse  to 
offer?     Let  us  see. 

Before  the  passage  of  the  Legal-Tender  Acts  the  States 
had  almost,  without  exception,  been  borrowers  of  money, 
and  for  the  money  they  borrowed  they  issued  their  bonds 
payable  in  dollars.  Have  a  majority  of  them  made  good, 
are  they  now  making  good,  their  agreements  ?  Has  their 
treatment  of  their  creditors  been  characterized  b}^  a 
'^scrupulous  regard  to  justice  and  by  a  high  sense  of 
honor?"  Have  they  kept  faith,  are  they  now  keeping 
faith,  with  their  creditors?  Have  they  not,  on  the  con- 
trary, for  years  past  withheld  from  them  50,  40,  30  per 
cent.  ?  Are  they  not  now  withholding  nearly  20  per  cent, 
of  what  is  justly  their  due  ?  The}^  are  paying,  it  is  true, 
in  what  Congress  has  decided  to  be  lawful  money;  but 
what,  after  all,  is  this  money  but  unfulfilled  promises, 
which  are  worth  just  what  they  sell  for  in  the  market 
and  no  more.  They  have  been  declared  to  be  lawful 
money,  but  they  certainly  are  not  the  kind  of  money 
which  was  borrowed  by  the  States,  and  which  the  States 
agreed  to  pay  in  return  for  the  money  they  borrowed. 
Are  they,  in  any  true  meaning  of  the  word,  money?  Is 
it  not  preposterous  to  call  mone}^  promises  to  pa}^  money, 
which  can  only  be  converted  into  money  by  the  payment 
of  a  heavy  discount  ?  Facts  are  stubborn  things,  which 
cannot  be  ignored;  and  the  fact  cannot  be  denied  that 


128 

many  of  our  States  are  onh^  making  partial  payment  to 
their  creditors.  Availing  themselves  of  a  law  for  the 
existence  of  which  they  are  in  part  responsible,  every 
time  they  have  paid  the  interest  on  these  bonds  since 
the  passage  of  the  Legal-Tender  Acts  they  have  com- 
pelled the  holders  to  take,  now  a  half,  now  a  third,  and 
now  a  fifth  less  than  was  called  for  by  their  contracts. 
Suppose  there  were  in  existence  a  great  international 
tribunal  established  by  the  nations  for  the  settlement  of 
all  questions  between  nations  and  of  the  claims  of  citi- 
zens against  sovereignties  (and  such  a  tribunal  would 
long  since  have  been  established  if  Christianity  had 
done  its  perfect  work),  which  one  of  our  distinguished 
lawyers  would  dare  to  go  before  that  tribunal  with  the 
contention  that  the  anti-war  debts  of  our  States  could 
be,  I  will  not  say  morally,  but  legally,  discharged  by 
the  tender  of  depreciated  notes  which  the  Government 
of  which  they  are  a  part  has  seen  fit,  for  purposes  of 
its  own,  to  declare  to  be  lawful  money  ?  If  a  part  of  the 
States  are  right  in  paying  legal  tenders,  how  has  it  hap- 
pened that  Massachusetts,  more  heavily  indebted  than 
any  of  them  in  proportion  to  population,  has  always 
paid  her  interest  in  coin?  Are  her  obligations  more  sa- 
cred than  theirs  ?  Massachusetts  has  done  no  more  than 
her  legal  and  moral  obHgations  required  of  her;  but  her 
escutcheon  is  clear.  She  never  faltered;  her  name  is 
honored  wdierever  her  name  is  known,  and  her  people 
have  not  only  the  proud  satisfaction  of  knowing  that 
their  State  at  least  has  always  acted  fairly  with  her 
creditors,  but  that  she  is  receiving  in  her  high  credit 
full  reward  for  her  fidelity. 
London,  June  ig,  1875. 


Eighth  Lkttkr. 

To  the  Editor  of  Tlie  Tribune : 

Sir:  No  matter  what  resolutions  may  be  adopted  by 
political  conventions  for  party  purposes,  it  is  unques- 
tionably true  that  the  bonds  of  the  United  States,  issued 
during  and  immediately  after  the  late  civil  war,  most  of 
which  are  known  as  five- twenties,  were  offered  and  sold 


124 

with  the  express  understanding  that  they  were  to  be 
paid,  principal  and  interest,  in  coin.  They  were  sub- 
scribed for  by  our  citizens  and  taken  from  them  by 
foreigners  with  this  understanding.  Had  it  been  other- 
wise, the  rebellion  would,  in  all  human  probability^ 
have  been  successful,  for  it  must  be  borne  in  mind  that 
the  contest  between  the  Government  and  the  Confed- 
erate States  depended  in  its  results  as  much  upon  money 
and  credit  as  upon  arms.  It  may  be  said  without  de- 
tracting from  the  skill  and  gallantry  of  the  officers  and 
soldiers  of  the  Union  armies  who  won  for  themselves 
and  for  their  Government  imperishable  renown,  that 
the  suppression  of  the  rebellion  was  attributable  no  less 
to  the  superior  financial  strength  than  to  the  superior 
numerical  strength  of  the  North.  If  victory,  the  other 
things  being  equal,  must  side  with  the  heaviest  battal- 
ions, it  is  mone}^  that  keeps  these  battalions  in  the  field. 
The  remark  has  been  attributed  to  Napoleon  that  in 
wars  between  nations  the  nation  that  can  command  the 
last  dollar  must  at  last  be  the  victor. 

It  ma}^  not  be  too  much  to  sa}^  that  the  Union  was 
"  saved  by  faith" — by  the  confidence  which  was  placed 
by  our  own  people  and  by  foreigners  in  the  assurances 
and  pledges  of  the  Government  speaking  through  its 
authorized  representatives.  Although  no  foreign  loan 
was  directly  made,  the  ability  of  our  citizens  to  sub- 
scribe and  pay  for  the  bonds  which  were  issued  de- 
pended upon  the  market  which  was  opened  for  them  in 
Europe — chiefly  in  Germany  and  Holland.  The  people 
of  the  United  States  owe  a  debt  of  gratitude  to  the  Ger- 
mans and  Hollanders  for  the  confidence  they  had  in  our 
securities,  while,  with  rare  exceptions,  the  investors  in 
all  the  other  European  markets  regarded  them  with  dis- 
trust. The  dealers  in  United  States  bonds  in  New  York 
and  other  seaboard  cities  know  how  important  the  Ger- 
man and  Holland  markets  were  to  us  in  the  days  of  our 
greatest  financial  troubles.  The  German  and  Holland 
purchasers  of  our  bonds  saw  that  they  were  in  the  usual 
form  of  national  obligations — that  they  were  payable  in 
dollars,  not  like  the  compound  interest  on  the  seventy- 
three-ten  notes  in  lawful  money,  but  in  dollars,  and  they 
took  it  for  granted  that  Secretary  Chase,  his  immediate 


125 


successors  and  their  agents  spoke  by  authority  when 
they  stated,  with  the  full  knowledge  of  the  Executive  and 
the  law-making  branch  of  the  Government,  that  by  dol- 
lars was  meant  not  irredeemable  promises  but  gold.  In- 
deed, without  such  assurances  they  would  not  have  sup- 
posed that  bonds  intended  to  be  sold  in  other  countries 
as  well  as  in  the  United  States  could  be  payable  in  any- 
thing else  than  coin,  the  only  international  currency  of 
the  world. 

Fortunately,  it  was  not  until  the  necessity  for  borrow- 
ing had  ceased   that  the  statutes  were  examined  for  the 
purpose  of  ascertaining  whether  or  not  the  Government 
could  violate  its  faith  without  violating  the  law.   By  this 
examination  it  was  discovered  that  the  act  of  March  3, 
1863,  under  which  $75,000,000  of  six  per  cent,  bonds — 
a  part  of  those  known  as  bonds  of  1881 — and  the  act  of 
March  3,  1864,  under  which  the  ten-forty  five  per  cents, 
were  issued,  were  the  only  ones  which  stated  expressly 
that  the  bonds  issued  under  them  should  be  paid  in  coin, 
and   that  all  the  other  acts  under  which  bonds  were  is- 
sued during  the  war,  while  they  provided   that  the  in- 
terest should  be  paid  in  coin,  were  silent  in  regard   to 
the  currency   in  which   the  principal  should  be    paid. 
Hence  the   position  was  taken   by   some  well-meaning 
persons,  and  other  not  well-meaning  persons,  that  the 
Government  might,  under  the   sweeping  provisions  of 
the  Legal-Tender  Acts,  lawfully  call  in  the  five-twenty 
bonds  at  any   time   after  five  years  from   their  date  and 
pay  them  in  legal-tender  notes,  no  matter  how  depre- 
ciated these  notes  might  be.     Indeed,  there   are  some 
prominent  men  among  our  politicians  (fortunately  the 
number  is  very  small  and  daily  becoming  less)  who  are 
brave  enough  to  assert  the  moral   as  well  as  legal  right 
of  Congress  to  repeal  the  act  of    1869,  which  pledges 
the  faith  of  the  nation  to  the  payment  of  all  its  bonds 
in  coin,  to  call  in  the  bonds,  which  by  their  tenor  are 
subject  to  be  called   in,  and  pay  them  in   legal-tender 
notes,   although  such  payment  might  necessitate   such 
further  issue  of  these  notes  as  would  make  the  entire 
issue  well  nigh  worthless.     This  would  be  rKpudiation, 
and   cowardly  repudiation   at  that — repudiation   which 
would  not  only  make  the  American  name  a  reproach 


120 

among  the  nations,  but  which  would  rob  the  people  for 
the  purpose  of  robbing  the  bond  holders.  It  has  been 
unfortunate  for  the  credit  of  the  Government,  and  con- 
sequently for  the  interest  of  the  tax-payers  in  the 
United  States,  that  this  question  has  ever  been  raised. 
It  would  not,  I  apprehend,  have  been  raised  by  any 
fair-minded  person  if  the  facts  and  circumstances  under 
which  the  bonds  were  issued  had  been  carefully  ex- 
amined, for  such  an  examination  would  have  sliown 
them  : 

First.  That  in  the  exhaustive  discussions  in  the  House 
and  the  Senate  of  the  acts  authorizing  the  issue  of  these 
bonds  they  were  spoken  of  by  all  who  participated  in 
the  debates  as  being  payable  in  gold.  If  anything  else 
had  been  intended,  would  Mr.  Thaddeus  Stevens,  the 
chairman  of  the  Committee  of  Ways  and  Means,  have 
uttered  the  following  language? 

A  dollar  in  a  miser's  safe  is  a  sore  disturbance.  Where  could 
they  invest  it?  In  United  States  loans  at  six  per  cent.,  redeem- 
able in  gold  in  twenty  years— the  best  and  the  most  prominent 
investment  that  could  be  desired.  But  widows  and  orphans 
are  interested  and  in  tears  lest  their  estates  should  be  badly 
invested.  I  pity  no  one  who  has  money  invested  in  United 
States  bonds  payable  in  gold  in  twenty  years,  with  interest 
semi-annually. 

I  defy  any  man  to  point  out  a  single  intimation  by  any 
meniber  of  Congress,  while  these  acts  were  under  consid- 
eration, or  by  any  journal  in  wdiich  they  were  discussed, 
that  the  bonds  to  be  issued  under  them  were  to  be  paid 
or  might  be  paid  in  legal-tender  notes. 

Second.  Such  an  examination  would  have  shown  that 
the  act  of  February,  1862,  the  first  of  the  Legal-Tender 
Acts,  and  the  most  important  of  the  Loan  Acts,  which 
authorized  the  issue  of  $150,000,000  of  legal-tender 
notes,  and  also  of  ^500,000,000  of  five-twenty  bonds, 
expressly  stated  that  the  purpose  for  w^hich  they  w^ere 
issued  was  to  enable  the  Secretary  of  the  Treasury  tp 
fund  the  Treasury  notes  (already  issued)  and  the  float- 
ing debt  of  the  United  States,  and  that  the  Secretary 
"  was  authorized  to  dispose  of  the  bonds  at  the  market 
value  thereof  for  coin  or  for  any  Treasury  notes  issued 
under  any  former  act  of  Congress  or  for  the  United 
States   notes    (greenbacks,   as  they   have  been  called) 


127 

that  might  be  issued  under  this  act."  Is  it  supposable 
that  Congress  intended  to  provide  for  funding  the  float- 
ing debt  and  Treasury  notes  in  these  $500,000,000  of 
bonds,  which  at  the  expiration  of  five  years  might  be 
called  in  and  paid  in  the  $150,000,000  of  notes  which, 
with  the  floating  debt  and  Treasury  notes,  were  thus  to 
be  funded  ? 

Third.  vSuch  an  examination  would  have  shown  that 
the  legal-tender  notes  were  regarded  as  a  forced  loan- 
temporary  only,  and  only  justified  by  those  who  advo- 
cated their  issue  as  a  war  measure.  The  fact  that  the 
issue  of  the  legal-tender  notes  was  limited  at  first  to 
$150,000,000,  and  subsequently  to  $400,000,000,  and  that 
they  were  intended  to  be  only  a  temporary  issue,  shows 
why  it  was  that  provision  was  only  made  for  the  pay- 
ment of  the  interest  in  coin.  There  was  not,  I  appre- 
hend, a  single  member  of  Congress  who  did  not  expect 
that,  before  the  expiration  of  five  years  from  the  date 
of  the  first  five-twenties,  the  legal-tender  notes  would 
be  paid  or  funded.  The  Secretary  of  the  Treasury  in 
his  report  of  1867  used  the  following  language: 

It  is  not  said  [in  the  Legal-Tender  Acts]  that  they  [the  le^al- 
tender  notes]  shall  not  be  receivable  for  the  principal  of  bonds, 
for  the  very  obvious  reason  that  they  were  expected  to  be  but 
a  temporary  circulation.  A  provision  that  these  notes— in- 
tended only  to  meet  a  temporary  emergency— should  not  be 
received  for  the  payment  of  the  principal  of  bonds  which  were 
not  redeemable  for  five  years  would  have  been  quite  likely  to 
have  prevented  their  issue.  The  public  judgment  had  not  then 
been  perverted  by  an  irredeemable  currency,  and  a  proposition 
that  indicated  a  long-continued  departure  from  the  specie 
standard  would  have  found  few  supporters  in  Congress  or 
among  the  people. 

Ko  one  can,  I  think,  read  the  debates  in  Congress 
upon  the  Legal-Tender  Acts  without  coming  to  the  con- 
clusion that  If  any  apprehension  had  been  expressed  or 
felt  that  these  notes  would  be  a  circulating  medium  for 
five  years,  the  authority  to  issue  them  would  not  have 
been  granted.  The  Secretary  of  the  Treasury  con- 
cluded his  thorough  discussion  of  this  question  in  the 
report  referred  to  (if  his  conclusions  have  been  refuted 
I  have  never  seen  the  refutation)  in  the  following  words, 
which,  I  trust,  I  may  be  pardoned  for  quoting. 


128 


lu  opposition  to  all  sucli  expedients  for  paying,  or  rather  for 
getting  rid  of,  the  public  debt  is  the  upright,  world-honored, 
economical  policy  of  paying  every  obligation  of  the  Govern- 
ment according  to  the  understanding  with  which  it  was  cre- 
ated; the  policy  of  appreciating  the  paper  dollar  until  it  shall 
represent  a  dollar  in  coin;  of  giving  stability  to  business  and 
assurance  to  enterprise,  and  wiping  from  the  country  the  re- 
proach that  rests  upon  it  by  reason  of  the  low  price  of  its  se- 
curities in  the  great  marts  of  the  world.  That  this  is  the  policy 
which  will  be  sustained  by  the  people  and  their  representatives 
the  Secretary  has  the  fullest  confidence.  There  may  hereafter 
be  nations  which,  ignoring  their  honorary  obligations,  may 
look  only  to  their  own  statutes  for  the  measure  of  their  liabili- 
ties. If  there  shall  be  such  nations,  the  Republic  of  the  United 
States  will  not  be  found  among  them.  She  has  essentially  suf- 
fered by  the  actual  repudiation  of  some  of  the  States  and  the 
virtual  repudiation  of  others;  she  is  still  suffering  from  the 
same  cause,  although  more  than  a  quarter  of  a  century  has 
elapsed  since  this  stigma  was  first  fixed  upon  American  credit. 
She  is  suffering  also  from  the  fact  that  Massachusetts  and  Cali- 
fornia alone  of  all  the  States  have  continued  to  pay  the  interest 
on  their  bonds  in  coin;  but  although  she  has  suffered  and  is 
still  suffering  from  the  bad  faith  and  false  economy  of  some  of 
her  members,  her  own  financial  honor  is  unsullied.  She  has 
committed  the  mistake  of  making  her  inconvertible  promises  a 
legal  tender,  but  she  has  never  taken  advantages  of  her  own 
legislation  to  lessen  in  the  hands  of  the  holders  the  value  of 
her  securities  or  violate  her  engagements  by  covert  repudia- 
tion. 

In  conclusion  I  would  ask,  if  it  was  true,  as  was  stated 
in  one  of  the  resolutions  of  the  State  Democratic  Con- 
vention of  Ohio  one  year  ago,  that  the  five-twenty  bonds 
"  were  by  the  letter  and  spirit  of  the  law,  and  by  the 
■general  understanding  of  the  community,  payable  in 
legal-tender  notes,"  how  happened  it  that  by  the  com- 
munity these  bonds  were  never  considered  to  be  of  less 
value  than  the  six  per  cent,  bonds  issued  under  the  act 
of  March  3,  1863,  or  of  comparatively  less  value  than 
the  five  per  cents,  issued  under  the  act  of  March  3, 
1864,  both  of  which  acts  provided  that  the  bonds  issued 
under  them  should  be  payable  in  coin?  Is  not  the  fact 
that  the  six  per  cents,  of  March  3,  1863,  have  not  had 
a  higher  reputation  than  the  other  bonds  of  the  same 
class  issued  under  other  acts,  and  that  the  five  per  cents, 
of  March  3,  1S64,  have  never  possessed  in  the  market  a 
value  corresponding  with  that  of  the  five-twenties,  con- 
clusive that  it  was  not  the  understanding  of  the  com- 


129 

munity  that  the  last-named  bonds  were  payable  in  legal- 
tender  notes?  Wonld  it  not  have  been  wiser  and  more 
patriotic  on  the  part  of  that  convention  if,  instead  of 
denouncing  Congress  for  pledging,  by  the  act  of  March, 
1869,  the  faith  of  the  Government  to  the  payment  of 
the  five-twenties  in  coin,  it  had  denounced  Congress  for 
not  doing  so  at  a  much  earlier  day.  according  to  the 
recommendation  of  the  Secretary  of  the  Treasury  in  his 
report  of  1865?  And  now,  is  it  not  the  dictate  of  pa- 
triotism that  all  citizens  of  the  United  States  should  do 
what  they  can  to  improve  the  national  credit  instead  of 
depreciating  it,  so  that  the  burden  of  this  national  debt 
may  be  diminished  not  only  by  payments,  but  by  a  re- 
duction of  the  rate  of  interest  which  it  bears? 

I  have  said  what  I  have  upon  this  subject  not  because 
there  is  an^^  danger  that  the  Government  will  ever  vio- 
late its  faith  to  its  creditors,  but  because  such  resolutions 
as  were  adopted  last  year  by  a  convention  in  Indiana, 
and  the  unwise  utterances  of  some  of  our  journals,  are 
used  by  foreigners  who  are  hostile  to  the  United  States 
to  depreciate  our  national  credit,  thus  rendering  it  more 
difficult  rapidly  to  fund  our  six  per  cent,  bonds  in  bonds 
bearing  a  lower  rate  of  interest.  A  reduction  in  the 
rate  of  interest  in  the  United  States  is  greatly  to  be  de- 
sired, and  a  reduction  of  the  rate  which  the  Government 
is  paying  would  tend  directly  to  bring  this  about.  Hence 
it  is  important,  as  well  for  the  diminution  of  the  burden 
of  the  public  debt  as  for  the  benefit  of  our  people  in 
their  private  transactions,  that  the  national  credit  should 
be  placed  on  the  highest  possible  basis.  Can  there  be 
any  doubt,  therefore,  as  to  what  should  be  the  position 
of  all  good  citizens  upon  a  question  of  so  great  import- 
ance ? 

lyONDON,  J  Illy  12,  187s  ■ 


Ninth  Letter. 
To  the  Editor  of  The  Tribune: 

Sir:  My  letter  upon  Indiana,  it  seems,  brought  down 
denunciation  and  abuse  from  a  number  of  journals  of  the 
State.     This  does  not  trouble  me  in  the  least:  but  while 


130 


I  care  nothing  for  the  abuse,  the  charge  of  a  wilful  mis- 
representation of  facts,  which  I  understand  has  been 
brought  against  me,  ought  not  to  be  permitted  to  pass 
without  attention.  It  will  be  borne  in  mind  that  I  said 
expressly  that  I  did  not  undertake  to  state  the  facts  with 
precision,  and  that  I  remarked  that  the  compromise, 
when  it  was  made,  was  considered  a  fair  one.  Since 
that  letter  was  written  I  have  received  a  number  of  com- 
munications and  sundr}^  documents,  b}^  which  the  state- 
ments I  made  instead  of  being  disproved  are  in  all  im- 
portant respects  confirmed. 

From  these  communications  and  documents,  and  from 
facts  well  known  to  the  public,  it  appears  that  at  the 
time  of  the  compromise  the  State  was  in  debt  some 
$12,000,000  on  bonds,  a  small  part  of  which  were  issued 
for  the  construction  of  the  Wabash  and  Erie  Canal, 
known  as  ^'Wabash  and  Erie  Canal  bonds,"  the  rest  for 
the  construction  of  various  works  throughout  the  State, 
and  known  as  "internal-improvement  bonds;"  that  the 
State  failed  to  pay  the  interest  on  these  bonds  soon  after 
they  were  issued,  in  consequence  of  which  they  became 
greatly  depreciated,  so  depreciated  as  to  have  little,  if 
any,  value  in  the  markets,  some  of  them  having  been 
sold,  as  I  was  informed  at  the  time,  for  less  than  the 
amount  of  the  interest  which  had  accrued  upon  them; 
that  in  1846,  some  six  or  seven  years  after  the  default 
occurred,  a  strong  pressure  having  been  brought  to  bear 
upon  the  Legislature,  a  compromise  was  effected  under 
the  provisions  of  what  is  known  as  the  "Butler  bill" 
between  the  State  and  a  majority  of  her  bond  holders 
represented  by  Mr.  Chas.  Butler,  by  which  compro- 
mise the  State  agreed  to  give  in  exchange  for  the  out- 
standing bonds  "State  stock,"  bearing  interest  at  the 
rate  of  five  per  cent,  per  annum,  for  one-half  of  the  prin- 
cipal of  the  bonds,  and  "canal  stock,"  bearing  the  same 
rate  of  interest,  for  the  other  half,  and  for  one-half  of 
the  accrued  interest  on  the  bonds  "State  stock,"  bearing 
two  and  a  half  per  cent,  interest,  and  for  the  other  half 
of  the  accrued  interest  "canal  stock,"  bearing  the  same 
rate  of  interest,  "the  canal  stock"  to  be  exclusively  and 
only  a  charge  upon  the  Wabash  and  Erie  Canal,  for  the 
extension  of  which  from  Lafayette  to  the  Ohio  Rive;- 


131 


the  bond  holders,  for  their  better  protection,  were  called 
upon  to  contribute  liberally.     To  this  compromise  there 
was  a  condition  that  the  State  would  make  no  provision 
thereafter  to  pay  either  principal  or  interest  on  any  in- 
ternal-improvement   bonds    until    the    holders    thereof 
should  have  first  surrendered  their  old  bonds  and  received 
therefor  the  above-named  ''stock,"  and  there  was  also 
a  provision  that  nothing  should  be  paid   to  the  holders 
of  the  "  stock  "  until  bonds  to  the  amount  of  $4,000,000, 
exclusive  of  interest,  had   been  surrendered  for  cancel- 
lation, according    to  the  terms  of   the  compromise.     It 
further   appears  that  the  canal,  chiefly  by  reason  of  the 
competition  of  railroads  which   were  made   alongside  or 
within  competing  distance  of  the   canal,  under   an    act 
subsequently  passed,  which   roads  have   added  largely 
to  the  wealth  and  taxable  property  of  the  State,  has  be- 
come of  little  if  of  any  value,  so  that  the  charge  upon  it 
in  favor  of  the  holders  of  the  "  canal  stock  "  is  w^orth- 
less.     It  further  appears  that  a  small  number  of  the  bond 
holders  declined  to  become  parties  to  the  compromise 
and  to  surrender  their  bonds,  and  that  John  W.  Garrett, 
(president  of  the  Baltimore  and  Ohio  Railroad),  who  was 
a  holder  of  some  of  the  bonds  issued   for  the   construc- 
tion of  the  canal,  instituted  a  suit  against  the  trustees, 
who,  under  the  terms  of  the  compromise,  had  charge  of 
the  canal,  for  the  benefit  of  the  holders  of  the  "  canal 
stock,"    and    obtained   a   decree   declaring    that   these 
Wabash  and  Erie  Canal  bonds  were  a   lien  upon  the 
canal  prior  and  paramount  to  the  claim  of  the  trustees; 
that  to  prevent  a  sale  of  the  canal  under  this  decree  the 
Legislature  made  provision  for  the  payment  of  the  bonds 
on  which  the  decree  had  been  obtained,  and  at  a  special 
session  in    1872,  by  an  act  "declaring   an  emergency," 
provided  for  the  payment  in  full,  principal  and  interest, 
of  all  the  bonds  issued  prior  to  1841,  and  not  surrendered 
under  the  Butler  bill,  whether  a  lien  upon  the  canal  or 
not.     Hence  it  appears  that  the  holders  of  the  internal- 
improvement  bonds,  constituting  much  the  larger  part 
of  the  State   debt,    received   for   half  of  their  claims 
''canal  vStock "   exclusively,  a  charge  upon  the   canal, 
which  w^as  already  subject  to  a  lien  in  favor  of  the  orig- 
inal canal   bonds;  that  the  holders   of  the  last-named 


132 

bonds  or  most  of  them  surrendered  their  prior  lien  upon 
the  canal  and  accepted  a  joint  lien  with  other  bond 
holders  who  had  no  claim  upon  it,  and  that  the  holders 
of  all  the  old  bonds  who  declined  to  surrender  them  have 
received  payment  in  full,  while  those  who  did  surrender 
their  bonds  have  received  but  fifty  cents  on  the  dollar. 
It  will  be  noticed  that  no  provision  was  made  for  the 
payment  of  the  bonds  which  had  not  been  surrendered 
under  the  Butler  bill  until  the  courts  had  decided  that 
a  part  of  them  at  least  were  a  lien  prior  to  the  "canal 
stock."  Now,  I  ask  whether  ni}-  previous  statement  in 
regard  to  the  compromise  of  the  State  with  her  creditors 
is  liable  to  the  charge  of  being  either  false  or  unfair  ? 
whether  what  I  omitted  in  that  statement  was  favorable 
to  the  State  ?  And  I  would  further  ask  whether,  in  view 
of  all  the  facts  as  now  stated,  it  was  a  creditable  thing 
or  a  fair  thing  for  the  people  of  Indiana  not  only  to  de- 
cline to  do  anything  themselves  for  the  unfortunate 
holders  of  the  "  canal  stock,"  but  to  undertake  to  pre- 
vent anything  from  being  done  for  them  hereafter  by  an 
amendment  of  the  constitution  of  the  State  absolutely 
prohibiting  it? 

I  regret  that  I  have  been  called  upon  to  refer  a  second 
time  to  this  unfortunate  com})romise,  for  unfortunate  I 
regard  it,  not  only  for  the  creditors,  but  for  the  other- 
wise fair  reputation  of  the  State — a  reputation  which,  I 
apprehend,  is  as  dear  to  me  as  it  is  to  those  who  have 
avSsailed  me.  Indiana  has  scarcely  suffered  more  by  fail- 
ing to  pay  her  debt  in  full  than  by  the  manner  in  which 
the  complaints  of  her  creditors  have  been  treated  by 
some  of  her  journals.  The  answer  of  one  of  the  Indian- 
apolis editors  to  an  application  of  a  bond  holder  for  the 
privilege  of  presenting  in  the  columns  of  his  paper  the 
case  of  the  holders  of  the  "  canal  stock  "  is,  in  the  mild- 
est language  in  which  I  can  speak  of  it,  a  masterpiece 
of  saucy  independence.  A  foreigner  who,  confiding  in 
the  honor  of  a  State,  became  the  purchaser  of  its  securi- 
ties and  had  been  a  loser  by  the  purchase,  if  his  appli- 
cation for  such  a  privilege  had  to  be  denied,  had  a 
right  to  expect  that  the  denial  would  be  couched  in 
courteous  language  and  that  he  would  not  be  denounced 
as  a  "Shylock"   for  merely  asking  permission  to  pre- 


183 

sent  in  the  onlj-  way  that  seemed  opened  to  him,  for 
the  consideration  of  the  people  of  the  State,  what,  in  his 
opinion  at  least,  was  a  meritorious  claim. 

An  Englishman,  writing  to  me  under  date  of  the  21st 
inst.,  makes  the  following  statement: 

I  am  the  holder  ofW abash  and  Erie  Canal  stock,  which  was 
forced  upon  me  hy  the  State  under  a  threat  and  taken  by  me 
at  least  under  protest.  I  was  then  a  poor  workiugman,  and  I 
took  $6  000,  nearly  every  cent  I  had  in  the  world.  Believing  in 
the  future  of  the  Western  States,  I  induced  another  poor 
"  Britisher  "  to  invest  in  Indiana,  and  we  have  acted  together. 
His  case  is  like  my  own,  except  that  his  was  the  larger  amount. 
Considering  that  Indiana  is  now  rich  and  flourishing,  I  wonder 
that  nothing  is  done  by  her;  for  a  shabby  and  dishonorable  act 
can  never  be  wiped  out  by  a  State  with  a  glorious  future. 

I  introduce  this  statement,  selected  from  many  others, 
as  an  illustration  of  the  fact  that  my  own  State  has  done 
something  to  "  block  the  way"  of  American  credit  on 
this  side  of  the  Atlantic. 

My  Virginia  letter  was,  on  the  whole,  kindly  received 
by  the  journals  of  that  State.  Both  letters  were  dic- 
tated by  no  other  than  the  kindest  sentiments.  I  am 
grateful  to  Virginia  for  the  honor  which  she  has  con- 
ferred upon  the  country.  I  give  to  her  full  credit  for 
the  efforts  which  so  many  of  her  citizens — true  scions 
of  an  honorable  stock— are  making  to  restore  her  former 
reputation.  That  their  efforts  have  not  been  successful 
is  attributable  to  the  fact  that  under  the  reconstruction 
acts  this  class  of  her  citizens  have  not  had  the  control 
of  her  legislation.  Governor  Kemper  is  an  able  and 
high-toned  Virginian.  It  is  true  that  he  carries  in  his 
body  a  Federal  bullet,  a  painful  reminder  of  his  mad- 
ness in  endeavoring  to  overthrow  a  Government  by  which 
Virginia  had  been  greatly  benefited  and  honored,  and 
which  she  has  done  so  much  to  establish.  He  ought  to 
have  known,  what  he  has  since  been  among  the  fore- 
most to  acknowledge,  that  a  Union  which  was  cemented 
by  blood,  and  in  part  by  the  best  blood  of  Virginia,  could 
not  be  severed.  But  although,  having  been  educated 
in  a  wrong  school  (the  Calhoun  school)  of  politics,  he 
went  with  his  State,  and  was  among  the  last  to  sur- 
render, he  will  be  found  among  the  most  earnest  and 
influential  workers  to  restore  the  relations  which  existed 


184 


between  Virginia  and  the  Federal  Government  before 
the  war;  and  if  the  debt  of  his  State  is  not  soon  put 
upon  a  footing  creditable  to  the  State  and  satisfactory  to 
her  creditors  the  fault  will  not  be  his. 

The  repudiation  of  her  debt  by  the  State  of  Minne- 
sota, to  which  my  attention  has  been  called,  has  been 
so  thoroughly  "ventilated"  that  I  had  not  thought 
it  necessary  to  refer  to  it.  It  was  not  onl}^  a  crime,  but 
a  blunder — an  act  that  admits  neither  of  defense 
nor  palliation.  That  a  State  like  Minnesota,  with 
a  soil  so  rich  and  a  climate  so  healthful — a  State  which 
lacks  only  credit  and  capital  to  make  her  at  an  earl}^ 
day  one  of  the  most  populous  and  wealthy  agricultural 
States  in  the  Union — should  for  the  purpose  of  ridding 
herself  of  the  burden  of  a  debt  vScarcely  exceeding  two 
millions  of  dollars  discredit  herself  with  her  sister 
States  and  before  the  world,  and  thereby  prevent  the  in- 
flux of  the  capital  she  needs,  is  inexplicable  on  any  other 
ground  than  that  her  people  w^ere  temporarily  demented. 
The  facts,  as  I  understand  them,  are  briefly  these:  The 
State,  for  the  purpose  of  encouraging  the  construction 
of  railroads  through  her  splendid  domain,  advanced  to 
various  railroad  companies  her  own  bonds,  issued  in 
conformity  with  her  laws  and  the  provisions  of  her  con- 
stitution— to  the  amount  of  $2,275,000 — taking  from 
these  companies  as  security  for  her  advances  their  first 
mortgage  bonds  and  also  other  obligations  to  secure  the 
payment  of  the  interest  on  the  State  bonds  which  had 
been  advanced  to  them.  The  railroad  companies  hav- 
ing failed  to  pay  the  interest  on  the  State  bonds  which 
they  had  agreed  to  pay,  the  State  foreclosed  the  mort- 
gages which  she  held  as  security  for  the  payment  of  the 
bonds  she  had  issued  to  them,  and  then  delivered  the 
property  she  had  acquired  by  this  foreclosure,  for  a 
petty  consideration,  not  to  her  bond  holders,  but  to  new 
corporations.  The  validity  of  the  bonds  and  their 
binding  obligation  upon  the  State  has  been  established 
by  the  decisions  of  the  courts.  The  bond  holders  had 
nothing  to  do  with  the  contracts  between  the  State  and 
the  companies  to  which  the  bonds  were  advanced.  The 
bonds  were  the  bonds  of  the  State,  and  the  State  was 
bound  legally  and  morally  to  pay  them,  whether  the 


135 

railroad  companies  complied  witli  tlieir  engagements  or 
not.  Now,  she  has  not  only  failed  to  pay  the  interest  on 
these  bonds  (the  coupons  due  in  June,  1859,  only  having 
been  paid) , but  under  the  false  impression  that  repudiation 
which  could  not  be  effected  by  a  State  law  could  be 
effected  by  a  constitutional  provision,  she  has  under- 
taken to  prevent  her  people  hereafter  from  redeeming 
her  credit  and  doing  justice  to  her  creditors  by  an 
amendment  of  the  constitution  repudiating  the  bonds, 
and  prohibiting  a  levy  of  taxes  for  the  payment  of  the 
interest  thereon.  In  view  of  this  action  of  the  Legisla- 
ture and  people  of  Minnesota,  is  it  to  be  wondered  at 
that  her  reputation  has  been  destroyed  and  that  a  stain 
has  been  cast  by  her  upon  American  credit  generally? 
The  language  of  our  distinguished  countryman,  Mr. 
Evarts,  who  reflects  honor  upon  the  American  name 
wherever  Americans  are  known,  is  no  stronger  (refer- 
ring to  these  bonds)  than  the  case  demands: 

The  maxim  that  a  State  will  do  justice  to  its  own  obliga- 
tions and  will  submit  to  no  coercion  of  courts  and  process,  as 
a  reflection  upon  its  honor,  seems  to  be  put  to  open  shame  by 
this  great  and  prosperous  State.  Confessedly,  the  only  obsta- 
cle to  the  collection  of  these  bonds  from  the  State  of  Minne- 
sota, whose  direct  obligations  they  are,  is  the  privilege  it  en- 
joys not  to  be  justifiable  in  any  court.  No  man  acquainted 
with  legal  principles,  or  susceptible  to  moral  impressions,  can 
dwell  upon  the  features  of  this  scandalous  history  of  debt  re- 
pudiated and  trust  betrayed  without  indignation. 

The  Ohio  Democratic  State  Convention  did,^  it  seems, 
adopt  a  resolution  in  favor  of  a  continued,  if  not  increased, 
issue  of  legal-tender  notes.  This  means,  of  course,  that 
the  Democracy  of  that  great  State  favor  depreciated 
promises  instead  of  coin  as  a  circulating  medium,  and 
are  willing  to  place  the  monetary  power  of  the  country 
in  the  hands  of  Congress.  If  this  resolution  does,  in 
fact,  express  or  reflect  the  sentiments  of  the  staunch  old 
State  rights,  hard  money  party,  which  I  honored  even 
when  I  opposed  it,  then,  indeed,  may  the  "Ethiopian" 
be  expected  to  "change  his  skin  and  the  leopard  his 
spots."  I  am  quite  sure  it  does  not.  The  Democratic 
party  has  always  been  opposed  to  paper  money  of  all 
kinds,  especially  to  irredeemable  notes,  and  it  will  con- 
tinue to  be  so  to  the  end  of  the  chapter.     Her  citizens 


1R6 


who  make  a  trade  of  politics  ma}^  change,  but  the  masses 
will  adhere  to  their  old  faith.  Governor  Allen,  whom  I 
used  to  admire  for  his  eloquence  and  have  alwa3^s  hon- 
ored for  his  personal  uprightness,  in  standing  upon  a 
soft-money,  centralization  platform,  must  feel  as  Gen- 
eral McClellan  did  upon  the  peace  platform  of  the  Chi- 
cago Convention.  I  am  anxious  to  hear  how  the  ques- 
tion of  the  currency  (upon  which  I  may  speak  in  my 
next  letter  more  directly  than  I  have  done)  is  being 
treated  by  such  pronounced  hard-money  men  as  William 
Allen,  Allen  G.  Thurman,  and  Henry  B.  Paine. 


London,  July  24^  18 


/J 


Tenth  Letter. 

To  the  Editor  of  The  Tribune: 

Sir:  Nearly  forty  years  ago  Daniel  Webster,  the 
greatest  constitutional  lawyer  and  one  of  the  greatest,  if 
not  the  greatest,  statesmen  that  our  country  has  pro- 
duced, uttered  the  following  memorable  language  in  the 
United  States  Senate: 

Most  unquestionably  there  is  no  legal  tender  in  this  country, 
under  the  authority  of  this  Government  or  any  other,  but  gold 
and  silver,  either  the  coinage  of  our  own  mints  or  foreign  coins, 
at  rates  regulated  by  Congress.  This  is  a  constitutional  prin- 
ciple, perfectly  plain  and  of  the  very  highest  importance.  The 
States  are  expressly  prohibited  from  making  anything  but  gold 
and  silver  a  legal  tender  in  payment  of  debts,  and  although  no 
such  express  prohibition  is  applied  to  Congress,  yet  as  Congress 
has  no  power  granted  to  it  in  this  respect  but  to  coin  money 
and  to  regulate  the  value  of  foreign  coins,  it  clearly  has  no 
power  to  substitute  paper  or  anything  else  for  coin  as  a  tender 
in  payment  of  debts  and  in  discharge  of  contracts.  Congress 
has  exercised  this  power  fully  in  both  its  branches.  It  has 
coined  money  and  still  coins  it;  it  has  regulated  the  value  of 
foreign  coins,  and  still  regulates  their  value.  The  legal  tender, 
therefore,  the  constitutional  standard  of  value,  is  established 
and  cannot  be  overthrown.  To  overthrow  it  would  be  to  shake 
the  whole  system.  Of  all  the  contrivances  for  cheating  the  la- 
boring classes  of  mankind  none  has  been  more  effectual  than 
that  which  deludes  them  with  paper  money.  Ordinary  tyranny, 
oppression,  excessive  taxation — these  bear  lightly  on  the  hap- 
piness of  the  mass  of  the  community  compared  with  a  fraudu- 
lent currency   and  the    robberies    committed  by   depreciated 


137 

paper.  Our  own  history  has  recorded  for  our  instruction  enough 
and  more  than  enough  of  the  demoralizing  tendency,  the  in- 
justice and  the  intolerable  oppression  on  the  virtuous  and  well 
disposed  of  a  degraded  paper  currency  authorized  or  in  any 
way  countenanced  by  the  Government. 

These  remarks  of  the  great  orator  and  statesman  were 
unchallenged  in  the  Senate  and  out  of  it;  nobody  then 
doubted  their  correctness.  It  must  be  borne  in  mind 
that  Mr.  Webster  was  not  a  strict  constructionist  of  the 
Constitution,  and  yet  in  this  passage  he  denies  the  right 
of  Congress  to  make  anything  but  gold  and  silver  legal 
tender  in  payment  of  debts.  It  will  also  be  remembered 
that  he  favored  well  regulated  and  convertible  paper 
money,  while  he  denounced  in  indignant  language  an 
inconvertible  and  depreciated  currency. 

In  opposition  to  this  opinion  of  Mr.  Webster,  and  not- 
withstanding his  warning — a  warning  justified  by  the 
history  of  other  nations  as  well  as  our  own — Congress, 
under' the  pressure  of  a  great  emergency  (but  as  a  tem- 
porary and  war  measure  only),  in  February,  1862,  passed 
an  act  authorizing  the  issue  of  notes  which  should  be  a 
legal  tender  in  payment  of  debts,  the  full  mischief  of 
which  first  step  in  the  wrong  direction  has  not  yet,  I 
fear,  been  realized.  Under  this  and  subsequent  acts 
$400,000,000  were  issued — nearly  the  full  amount  of 
which  is  still  in  circulation— more  than  thirteen  years 
after  the  first  issue,  and  more  than  nine  years  after  the 
emergency  which,  and  which  only,  in  the  opinion  of  those 
who  advocated  the  measure,  justified  it  had  ceased. 

In  a  speech  at  Fort  Wayne,  in  October,  1S65,  the  Sec- 
retary of  the  Treasury  foreshadowed  his  own  policy,  and 
what  he  thought  should  be  and  would  be  the  national 
policy,  in  the  following  language: 

I  am  not  of  those  who  seem  to  be  disposed  to  repudiate  coin 
as  a  measure  of  value  and  to  make  a  secured  paper  currency 
the  standard.  On  the  contrary,  I  belong  to  that  class  of  persons 
who,  regarding  an  exclusively  metallic  currency  as  an  imprac- 
ticable thing  among  an  enterprising  and  commercial  people, 
nevertheless  look  upon  an  irredeemable  currency  as  an  evil 
which  circumstances  may  for  a  time  (seem  to)  render  a  neces- 
sity, but  which  is  never  to  be  sustained  as  a  policy.  By  common 
consent  of  the  nation  gold  and  silver  are  the  only  true  measures 
of  value.  I  have  myself  no  more  doubt  that  these  metals  were 
prepared   by  the   Almighty  for  this   very  purpose  than  I  have 


138 

that  iron  and  coal  were  prepared  for  the  purpose  for  which  they 
are  being  used.  I  favor  a  well  secured,  convertible  paper  cur- 
rency; no  other  can  to  any  extent  be  a  proper  substitute  for 
coin.  I  have  no  faith  in  a  prosperity  which  is  the  result  of  a 
depreciated  currency,  nor  can  I  see  any  safe  path  for  us  to  tread 
but  that  which  leads  to  specie  payments.  The  extreme  high 
prices  which  now  prevail  in  the  United  States  are  an  unerring 
indication  that  the  business  of  the  country  is  in  an  unhealthy 
condition.  We  are  measuring  values  by  a  false  standard.  We 
have  a  circulating  medium  altogether  larger  than  is  needed  for 
legitimate  business;  the  excess  is  used  in  speculations.  The 
United  States  to-day  are  the  best  market  in  the  world  to  sell 
in  and  among  the  worst  to  buy  in.  The  consequence  is  that 
Europe  is  selling  us  more  than  she  buys  of  us  (including  our  se- 
curities, which  ought  not  to  go  abroad),  and  there  is  a  debt  roll- 
ing up  against  us  which  must  be  settled  in  part  at  least  with 
coin.  The  longer  the  inflation  continues  the  more  difficult  it 
will  be  for  us  to  get  back  to  the  solid  ground  of  specie  payments 
to  which  we  must  sooner  or  later  return.  If  Congress  shall 
early  in  the  approaching  session  authorize  the  funding  of  the 
legal  tenders  and  the  work  or  reduction  is  commenced  and  car- 
ried on  resolutely,  but  carefully  and  prudently,  we  shall  reach 
it  probably  without  serious  embarrassment  to  legitimate  busi- 
ness; otherwise  we  shall  have  a  brief  period  of  hollow  and  se- 
ductive prosperity,  resulting  in  widespread  bankruptcy  and 
disaster. 

But  while  I  am  anxious  about  the  present  inflation  and  its 
effect  upon  the  business  and  morals  of  the  country,  I  am  hopeful 
that  by  wise  legislation  we  shall  escape  a  financial  collapse.  I 
am  hopeful  that  the  currency  may  be  brought  up  to  the  specie 
standard  without  those  financial  troubles  which  have  in  all 
other  countries  followed  protracted  and  expensive  wars.  By 
the  experience  of  the  last  four  years  we  are  led  to  the  conclu- 
sion that  our  people  have  a  latent  power  that  manifests  itself 
when  required,  and  is  equal  to  any  emergency.  I  have  faith 
that  as  we  have,  to  the  astonishment  of  the  world,  raised  im- 
mense armies — larger,  I  apprehend  than  any  single  nation  ever 
brought  into  the  field — and  met  the  enormous  expense  of  the 
war  without  borrowing  from  other  nations,  we  shall  also  be 
able,  without  a  financial  crisis,  to  fund  our  surplus  currency 
and  interest-bearing  notes,  bring  back  business  to  a  specie 
standard,  and  place  the  credit  of  the  country  on  the  most  sound 
and  stable  basis. 

This  speech,  or  a  least  the  financial  portion  of  it,  was 
published  in  most  of  the  newspapers,  and  was,  as  far  as 
the  Secretary  could  judge  by  the  comments  upon  it, 
favorably  received  by  the  press  and  the  people.  The 
views  thus  foreshadowed  were  somewhat  elaborately 
presented  in  his  first  report  to  Congress,  December, 
1865.     In  this  report  he  pointed  out  as  clearly  as  he  was 


139 

able  the  causes  of  previous  financial  crisis,  the  delusive- 
ness of  the  apparent  prosperity  of  the  country,  the  in- 
jurious effect  of  a  depreciated  and  fluctuating  currency 
upon  business,  and  its  demoralizing  influences  upon  the 
people,  the  wide  departure  of  the  I^egal-Tender  Act 
from  that  strict  construction  of  the  Constitution  given  to 
it  previous  to  the  war  by  patriot  men  of  all  parties,  etc., 
and  he  recommended  as  the  proper  remedy  and  the  only 
remedy  for  the  evils  and  dangers  in  which  the  country 
had  been  involved  the  gradual  withdrawal  of  the  legal- 
tender  notes  and  the  curtailment  of  the  currency  until 
it  should  be  equal  to  specie.  The  views  thus  presented 
having  been  carefully  considered,  the  House  of  Repre- 
sentatives, reflecting  undoubtedly  the  existing  popular 
vSentiment,  passed,  by  a  vote  of  144  to  6,  the  following 
resolution : 

Resolved,  That  this  House  cordially  concurs  in  the  views  of 
the  Secretary  in  relation  to  the  necessity  of  a  contraction  of  the 
currency  with  a  view  to  as  early  a  resumption  of  specie  pay- 
ments as  the  business  interests  of  the  country  will  permit,  and 
we  pledge  co-operative  action  to  this  end  as  speedily  as  prac- 
ticable. 

This  resolution  was  followed  by  the  act  of  April  12, 
1866,  authorizing  the  Secretary  of  the  Treasury  to  re- 
ceive Treasury  notes  and  other  obligations  of  the  Gov- 
ernment, whether  bearing  interest  or  not,  in  exchange 
for  bonds,  with  a  provision  that  of  the  United  States 
notes  (legal  tenders)  not  more  than  $10,000,000  should 
be  canceled  within  six  months  from  the  passage  of  the 
act,  and  thereafter  not  more  than  $4,000,000  in  any  one 
month.  This  act  was  a  movement  by  Congress  in  the 
right  direction;  the  only  objection  to  it  was  the  pro- 
vision for  a  regular  monthly  withdrawal.  Every  busi- 
ness man  knows  there  are  seasons  of  the  year  in  which 
large  curtailments  of  a  redundant  currency  can  be 
made  without  disturbing  the  business  of  the  country, 
while  at  other  seasons  small  curtailments  may  produce 
injurious  effects.  I  give  it  as  my  mature  judgment  that 
if  the  Secretary  had  been  unrestricted  in  regard  to  the 
time  and  amount  of  the  withdrawal  of  the  legal-tender 
notes  from  circulation,  and  the  publication  of  the  monthly 
reports  had  been  discontinued,  a  hundred  millions  of 


140 


these  notes  might  have  been  retired  in  the  course  of  a 
3^ear  without  the  people  being  the  wiser  for  it  or  busi- 
ness being  deranged  b}^  it.  A  single  incident,  which 
was  alluded  to  by  Mr.  Wells  in  his  very  able  article 
which  appeared  some  time  since  in  The  Herald,  illus- 
trates the  strength  of  a  popular  idea,  or  rather  "  notion," 
as  it  might  more  properly  be  called. 

Some  time  after  the  curtailment  of  four  millions  per 
month  had  been  in  operation  one  of  those  periodical  but 
temporar}^  stringencies  occurred  in  Wall  street  (such  as 
would  occur  if  there  were  a  thousand  millions  of  money 
in  circulation),  and  this  stringency  was  improperlj^  at- 
tributed to  the  action  of  the  Secretary  in  retiring  the 
legal-tender  notes.  Mr.  Van  D3xk,  the  clear-headed 
and  judicious  sub-treasurer  at  New  York,  who  kept  me 
prompth'  advised  of  everything  which  was  occurring  at 
the  commercial  center  which  was  likely  to  affect  the  in- 
terests of  the  Department  and  who  anticipated  ever}^ 
possible  danger  therefrom,  informed  me  that  there  were 
indications  of  a  Wall  street  panic,  and  expressed  his  ap- 
prehensions that  if  the  next  monthly  statement  showed 
that  the  usual  curtailment  had  been  made  a  panic  would 
actually  occur.  The  apprehensions  of  Mr.  Van  Dyck 
were  also  expressed  by  other  valued  and  judicious  cor- 
respondents in  New  York,  and  although  I  knew  that  the 
disease  with  which  the  country  was  laboring  was  a  ple- 
thora of  paper  mone3%  and  that  there  was  then  no  real 
causes  for  a  panic,  I  thought  it  wise  to  give  heed  to  the 
warnings  which  I  had  received.  I  thereupon  sent  for 
General  Spinner  (who,  I  am  sorry  to  learn,  is  not  to 
occup}'  through  life  a  position  the  duties  of  which  he 
has  for  so  many  years  discharged  with  an  ability  un- 
surpassed and  a  diligent  fidelit}^  unequaled  by  any  offi- 
cer ever  employed  by  the  Government)  and  said  to 
him: 

General,  our  friends  in  New  York  advise  me  that  there  will 
be  a  panic  in  Wall  street  if  your  next  statement  shows  that  the 
usual  monthh'  curtailment  has  been  made.  You  have  the  four 
millions  for  cancellation  on  hand,  and  have  no  occasion  to  use 
them.  The  law  only  authorizes  their  cancellation;  it  does  not 
require  it.  Let  them  remain  where  they  are,  so  that  your  state- 
ment will  show  them  to  be  cash  on  hand  and  not  notes  with- 
drawn from  circulation. 


141 

This  course  was  pursued,  and  although  the  four  mil- 
lions had  been  actually  retired  and  were  not  to  see  day- 
light again  except  to  be  counted  and  burned,  the  report 
at  the  end  of  the  month  indicated  that  the  depleting  hand 
of  the  Treasury  had  been  stayed.  Wall  street  was  at  once 
in  good  humor  again,  and  the  operators  for  a  rise  were 
relieved,  as  the  sensualist  is  relieved  who,  oppressed  by 
his  late  dinner  and  heavy  wines,  dreams  that  he  is  in 
trouble  and  wakes  up  overjoyed  to  find  that  his  dream 
was  not  a  reality. 

I  have  made  the  foregoing  reference  as  sailors  take  an 
observation  after  being  long  in  a  fog,  to  show  how  ret- 
rograde have  been  the  movements  of  our  finances  during 
the  last  eight  years.  First,  in  obedience  to  the  sense- 
less outcry  against  contraction  (although  the  withdrawal 
of  legal  tenders  had  been  fully  made  up  by  the  increased 
circulation  of  the  national  banks),  came  the  repeal  of 
the  act  authori:cing  the  withdrawal  and  cancellation  of 
the  legal  tenders;  then  the  decision  of  the  Supreme 
Court  (overruling  its  former  decision)  that  the  Legal- 
Tender  Acts  were  not  only  constitutional,  but  that  the 
notes  issued  under  them  could  be  tendered  and  must  be 
received  in  satisfaction  of  contracts  made  before  as  well 
as  after  the  acts  were  passed. 

Thus  the  currency  question  was  settled  and  everybody 
was  happy.  The  operators  in  stocks  and  gold  were 
happy,  because  no  Secretary  could  lay  his  ruthless  hands 
upon  the  currency;  the  railroad  companies  were  happy, 
because  they  could  pa}^  in  depreciated  notes  the  interest 
of  the  bonds  (and  the  principal  if  they  had  matured)  is- 
sued before  the  passage  of  the  Legal-Tender  Acts; 
States  were  happy,  because  they  could  violate  the  letter 
and  spirit  of  their  obligations,  andyet  keep  within  the  law; 
railroads  were  built  or  commenced  in  advance  of  the  need 
of  them,  because  money  could  be  borrowed  and  profits 
could  be  made  in  their  construction;  extravagance,  with 
w^aste,  its  concomitant,  increased,  and  everything  seemed 
to  be  '  'lovely,"  as  lovely  as  a  marriage  feast.  So  strong 
had  become  the  delusion  produced  by  a  redundant  and, 
in  the  language  of  Webster,  a  degraded  currency,  that 
one  of  the  most  sagacious  bankers  in  New  York,  who 
had  formerly  been  one  of  the  most  vigorous  supporters 
of  contractions,  said  to  me  in  the  autumn  of  1870: 


142 


Mr.  McCulloch,  I  think  we  shall  have  to  acknowledge  that 
we  were  in  the  wrong  in  our  opposition  to  the  legal-tender 
notes;  the  country  is  prospering  in  spite  of  them.  We  are  get- 
ting on  very  well,  if  we  have  superabundance  of  currency. 

But,  alas!  alas!  all  eartlil}^  bliss  is  transient,  if  not  il- 
lusory. The  happy  days  rolled  on  until  the  time  came, 
later,  I  admit,  than  I  had  expected;  when  the  inflation 
bubble  could  no  longer  bear  the  strain  upon  it,  and  the 
country  was  awakened  from  its  blissful  dreams  to  a  real- 
ii^ation  of  the  fact  that  what  had  appeared  to  be  solid 
was  unsubstantial — that  the  seeming  prosperity  of  the 
country  was  delusive.  The  first  impression  made  upon 
the  public  mind  by  the  crisis  of  September,  1873,  was 
that  there  was  merely  a  panic  in  New  York,  which  would 
be  as  temporary  as  that  of  1857.  This  impression  was 
of  short  duration.  A  few  days  were  sufficient  to  show 
that  what  was  supposed  to  be  onl}'  an  unreasonable  and 
unreasoning  panic  was  the  outbreak  of  deep-rooted  dis- 
order, to  stay  which  the  reissue,  as  it  was  called,  of 
$26,000,000  of  legal-tender  notes  was  as  powerless  as 
bread  pills  would  be  to  check  the  progress  of  cholera  or 
yellow  fever.  And  now  while  it  seems  to  me  as  clear 
as  day  that  our  financial  troubles  are  attributed  mainl}^, 
if  not  exclusively,  to  a  reduntant  currency,  we  find  thou- 
sands of  honest-minded  people  and  the  intelligent  leaders 
of  a  great  party  in  one  State  at  least  denouncing  contrac- 
tion, when  there  has  been  no  contraction,  as  the  cause  of 
these  troubles,  and  clamoring  for  more  currency  as  a 
cure  of  a  disease  which  an  excess  of  currency  has  pro- 
duced. Whatever  may  be  the  operations  of  such  prac- 
tice upon  the  human  system  it  is  certain  that  financial 
disorders  are  not  curable  by  doses — allopathic  or  homeo- 
pathic— of  the  poison,  from  the  effect  of  which  collapse 
has  resulted. 

In  view  of  what  has  occurred  in  our  recent  financial 
history  is  it  strange  that  a  calm  looker-on  should  have 
said  to  me  a  few  days  ago: 

You  Americans  have  seen  the  beginning  of  trouble,  but  not 
the  end.  You  are  passing  through  one  Jordan,  but  a  deeper 
one  has  yet  to  be  traversed  before  you  stand  upon  solid  ground 
again.  You  are  too  wise  to  profit  by  the  experience  of  other 
nations.     You  will  hug  the  delusion  that  you  can  make  money 


143 


by  printing  presses,  that  promise-to  pay  dollars  are  as  good  as 
dollars,  until  they  become  as  worthless  as  the  assignats  of 
France,  and  you  will  close  the  account  by  repudiating  them. 

Was  he  right?  Most  assuredly  he  was  not;  and  yet 
I  cannot  deny  that  we  have  given  and  are  still  giving 
him  good  reasons  for  his  conclusions. 

London,  August  2,  187s • 


Blkventh  Letter. 
To  the  Editor  of  The  Tribuiic  : 

Sir:  I  have  been  pained  by  noticing  in  the  London 
Times  a  cable  despatch  annonncing  the  death  of  Andrew 
Johnson.  I  hope  I  may  be  permitted  to  offer  to  his 
memory  a  brief  tribute  of  respect.  I  knew  Mr.  John- 
son intimately  for  four  years,  and  had  perhaps  as  much 
of  his  confidence  as  he  gave  to  any  member  of  his  Cabi- 
net. My  impression,  however,  was  that  his  experience 
as  a  politician  had  made  him  distrtistful,  and  that  he 
never  gave  his  confidence  tmreservedly  to  any  one  out- 
side of  his  own  family.  This  distrust  was  one  cause  of 
the  unpopttlarity,  not  to  say  failtire,  of  his  administra- 
tion. Had  he  confided  in  the  leaders  of  the  party  which 
brought  him  into  power  and  gone  with  them  his  path 
would  have  been  a  pleasant  one,  or  if,  discarding  them, 
he  had  called  to  his  aid  the  leaders  of  the  opposition, 
with  whom  on  most  qtiestions  he  was  in  sympathy,  he 
would  have  shared  with  them  the  responsibilities  of  a 
most  difficult  position,  and  received  a  support  which  he 
needed  but  seemed  not  to  desire.  Thus,  unconsciously 
perhaps,  distrustftil  of  his  fellow-men,  but  conscious  of 
the  rectittide  of  his  intentions,  he  attempted  the  impos- 
sibility of  administering  properly  the  Government  in  the 
most  trying  period  of  its  history  without  a  party  to  sup- 
port him.  Distrust  was  one  of  his  faults,  and  in  becom- 
ing President,  not  by  the  choice  of  the  people  but  by 
the  death  of  Mr.  Lincoln,  and  regarded  on  account  of  his 
being  a  Tennesseean  (notwithstanding  the  evidence  he 
had  given  of  his  fealty  to  the  Union),  with  suspicion 
by  many  of  the  extreme  men  of  the  North,  it  was  per- 


144 

haps  his  greatest  fault.  Another  fault,  and  a  very  dan- 
gerous one  in  a  Chief  Magistrate,  was  an  irre.sistible  pro- 
pensity to  make  speeches  and  to  indulge  in  invectives 
unbecoming  his  great  office,  and  frequently  unjust  to 
those  whom  he  attacked  or  against  whom  he  undertook 
to  defend  himself.  He  never  comprehended  the  power 
of  silence.  Then,  too,  he  was  combative.  His  whole 
life,  from  the  tailor's  bench  to  the  Senate,  had  been 
filled  with  the  combats  in  which  he  had  been  engaged, 
single  handed,  with  a  powerful  Southern  aristocracy, 
bent  upon  preventing  his  political  and  social  advance- 
ment. This  combativeness  he  carried  into  the  Execu- 
tive Mansion.  It  had  become  a  part  of  his  nature,  and 
he  could  not  rid  himself  of  it.  He  seemed  never  to  be 
happy  unless  he  had  some  one  to  strike  at  or  denounce. 
Such  were  his  faults,  and  they  were  grievous  ones  in  the 
highest  officer  of  the  Government,  but  great  as  they 
were  they  were  counterbalanced  by  man}-  of  the  noblest 
qualities. 

He  was  a  man  of  convictions,  and  unalterably 
true  to  them.  Lacking  quickness  of  apprehension,  he 
was  slow  in  reaching  conclusions,  but  when  he  reached 
them  he  adhered  to  them  with  unconquerable  tenacity. 
No  braver  man,  morally  or  physically,  ever  lived.  Sen- 
sitive to  pain,  he  possessed  an  indomitable  will  that  led 
him  to  endure  it  without  a  murmur.  During  his  occu- 
pancy of  the  Executive  Mansion  he  was  the  victim  of  a 
most  painful  disease,  and  although  his  agon^^  was  at 
times  most  excruciating,  it  was  indicated  only  by  a  slight 
contraction  of  the  facial  muscles.  I  said  to  him  one  day 
upon  observing  this  peculiar  muscular  contraction :  ' '  Mr. 
President,  you  are  not  well."  "  No,"  replied  he;  "  no, 
Mr.  Secretary.  I  could  not  suffer  more  if  an  animal 
were  gnawing  my  vitals,"  and  yet  he  continued  at  his 
work  as  if  in  perfect  health.  He  was  of  the  same  ma- 
terial that  martyrs  are  made  of,  and  had  he  lived  in  their 
days  and  been  sentenced  to  the  stake  he  would  have 
died  as  they  did,  without  recanting  his  opinions  or  giv- 
ing expression  to  his  agon3^  A  bitter  enemy,  he  never 
struck  a  foe  after  he  considered  him  vanquished.  In  his 
family  relations  he  was  affectionate  and  indulgent;  fond 
of  his  children,  he  w^as  as  gentle  and  kind  in  his  treat- 


145 

ment  of  them  as  a  woman.  Notwithstanding  his  distrust 
of  men,  he  was  full  of  generous  emotions.  Never  ab- 
sent from  his  post,  he  was  one  of  the  most  indefatigable 
workers.  He  was  orderly  in  his  habits  and  tasteful  in 
his  dress,  and  although  deprived  of  the  advantages  of 
what  is  called  good  society  in  his  early  life  he  had  the 
bearing  and  address  of  a  gentleman.  The  White  House 
was  never  more  what  the  mansion  of  the  President  ought 
to  be,  than  when  it  was  occupied  by  himself  and  his 
modest,  unpretending,  but  really  accomplished  daugh- 
ters. Stigmatized  by  his  opponents  as  an  inebriate,  he 
was  not  intemperate  in  the  use  of  liquors.  For  some 
six  weeks  after  he  became  President  he  occupied  a  room 
opening  into  mine  in  the  Treasur}^  Department,  where 
I  saw  him  every  hour  from  nine  in  the  morning  until 
five  in  the  afternoon,  and  for  nearly  four  years  there  was 
not  a  day,  both  in  seasonable  and  unseasonable  hours, 
that  I  did  not  meet  him,  and  although  I  frequently  saw 
him  under  excitement  which  a  stranger  might  have  re- 
garded as  indicating  intoxication,  I  never  saw  him  under 
the  influence  of  liquor.  The  reports  of  his  inebriety, 
which  were  circulated  broadcast  over  the  country  and 
believed  perhaps  b}'  a  majority  of  his  countrymen,  were 
audacious  calumnies. 

Mr.  Johnson  was  a  man  of  vigorous  intellect.  What 
he  lacked  in  culture  he  made  up  in  robust  strength. 
His  annual  messages  (with  the  exception  of  \\vs  faux  pas 
in  regard  to  the  payment  of  the  Government  bonds) 
and  his  other  messages  to  Congress  are  admitted  to  have 
been  among  the  ablest  of  our  Executive  papers.  Of  his 
patriotism — his  hearty  devotion  to  the  Union — there  can 
be  no  question.  He  gave  illustrious  proof  of  this  in 
Tennessee,  when  to  be  an  outspoken  Union  man  was  at- 
tended with  danger  that  few  men,  however  brave,  dared 
to  encounter.  During  the  dark  days  of  the  war  his  was 
about  the  only  cheering  voice  that  came  up  from  the 
South.  I  recollect  with  what  enthusiasm  he  was  re- 
ceived when  he  came  to  Indiana  to  rebuke  treason  and 
strengthen  the  faith  of  the  supporters  of  the  Govern- 
ment when  its  existence  was  in  peril.  He  lived  long 
enough  to  make  friends  of  thousands  of  his  enemies,  and 
the  welcome   that  he  received    when  returned  to  the 


146 

Senate,  of  which  he  had  been  for  man}^  years  a  conspic- 
uous member,  and  before  which  he  had  been  tried  as  a 
criminal,  was  as  creditable  to  his  former  opponents  as  it 
was  honorable  to  himself.  His  love  of  the  Union  found 
fitting  expression  in  his  dying  request— that  the  flag  of 
the  Union  should  be  his  winding  sheet.  Peace  to  his 
ashes,  and  honor  to  his  memory. 

I^ONDON,    August  2,   187s. 


Twelfth    I^ettkr. 

To  the  Editor  of  The  Tribune : 

Sir:  a  few  days  ago  I  asked  a  gentlemen  of  large 
experience  and  careful  observation — a  friend  of  the 
United  States  when  we  had  few  friends  among  the  leading 
men  of  England — ''When  shall  we  be  able  to  borrow  at 
four  per  cent,  for  the  purpose  of  retiring  our  six  per 
cent.  Government  bonds  ?  " 

"When,"  replied  he,  "you  get  back  to  specie  pay- 
ments. Everything  hinges  upon  that.  I  agree  with 
you  that  the  credit  of  your  Government  ought  to  be 
equal,  if  not  superior,  to  that  of  any  Government  in 
the  world,  and  it  will  be  when  you  come  to  your  senses 
upon  the  question  of  the  currency.  Should  the  infla- 
tionists succeed  in  their  eff'orts  to  increase  the  circula- 
tion of  irredeemable  legal-tender  notes,  you  will  not 
only  be  unable  to  place  your  four  per  cents,  either  at 
home  or  in  Europe,  but  you  will  find  even  the  holders 
of  your  fives  (for  which  there  is  now  an  active  demand 
at  a  premium)  disposed  to  get  rid  of  them  as  speedily 
as  possible.  If  the  inflationists  get  the  control  of  your 
legislation  and  renew  the  old  and  foolish  experiment  of 
making  money  plentiful  by  the  use  of  the  printing  press, 
the  credit  of  your  great  country  will  sink  to  the  level  of 
Egypt  or  Turkey." 

This  opinion,  which  I  have  given  in  very  nearly  the 
language  of  the  gentleman  who  expressed  it,  is  the  pre- 
vailing sentiment  on  this  side  of  the  Atlantic.  There 
is  not  an  intelligent  man  in  all  Europe  who  has  given 


147 


attention  to  the  subject  who  does  not  wonder  at  the  in- 
fatuation, if  it  be  not  something  more  than  infatuation, 
of  the  advocates  of  an  irredeemable  currency  in  the 
United  States  who  does  not  condemn  the  irresohition  of 
most  of  those  who  claim  to  be  the  friends  of  a  sound 
currenc}'.  There  is,  in  fact,  more  danger  to  be  appre- 
hended from  the  timidity  of  many  who  are  ranked  on 
the  side  of  specie  than  from  the  undisguised  action  of 
those  who  favor  further  issues  of  Government  notes. 
The  latter  are  in  earnest,  and  their  aim  is  apparent; 
the  former  are  deceiving  themselves  with  delusive  ex- 
pections.  Every  reflecting  and  intelligent  man  must 
perceive  that  a  further  issue  of  irredeemable  notes 
means  further  depreciation  of  those  now  in  circulation, 
an  increase  of  financial  trouble,  and  ultimate  repudia- 
tion; but  the  fatal  results  of  the  "  let  alone  "  policy  are 
not  vSO  apparent.  An  immense  majority  of  our  leading 
politicians  of  all  parties  are  sound  in  theory,  but  they 
seem  to  lack  nerve.  The  resolutions  which  they  adopt 
in  their  conventions  lack  the  metallic  ring  of  real  earn- 
estness. They  favor  a  return  to  specie  payments,  but 
they  do  not  say  how  this  is  to  be  effected.  They  de- 
preciate a  continuance  of  a  depreciated  currency,  but 
they  hesitate  to  put  their  hands  upon  the  prime  cause 
of  mischief — the  legal-tender  notes.  They  seem  to  be 
afraid  of  the  bugbear  of  contraction,  as  if  a  return  to 
the  true  measure  of  value  would  effect  values.  They 
seem  blind  to  the  self-evident  proposition  that  there 
will  be  no  real  contraction  if  the  purchasing  power  of 
the  currenc}^  is  increased  proportionately  with  a  reduc- 
tion of  its  volume.  If  the  specie  standard  is  to  be  re- 
stored, something  more  is  required  than  the  passage  of 
milk  and  water  resolutions  and  acts  of  Congress  fixing 
a  da}^  on  which  resumption  shall  take  place.  Unless 
some  decided  and  practical  measures  are  put  into  actual 
operation  for  the  restoration  of  the  .specie  standard  we 
shall  go  on  as  we  have  been  going  for  some  time  past, 
during  which  every  day  has  made  a  return  to  the  paths 
of  safety  and  real  prosperity  more  difficult.  Let  us  look 
for  a  moment  at  the  causes  of  the  existing  embarrass- 
ments and  prostration  in  the  United  States  and  then  con- 
sider some  of  the  remedies  which  have  been  suggested 


148 


First,  the  causes.  That  there  is  a  great  stagnation  in 
all  or  nearly  all  branches  of  enterprise  and  industr}-  in 
the  United  States;  that  our  manufactures  are  sadly  de- 
pressed; that  very  few  of  our  railroads  are  yielding  fair 
returns  on  their  actual  cost,  while  a  large  part  of  them 
are  unable  to  pay  the  interest  on  their  bonds;  that  our 
shipping  interests  have  so  declined  that  the  United 
States,  which  a  quarter  of  a  century  ago  seemed  in  a 
fair  way  to  become  the  first  of  maritime  powers,  is  now 
not  to  be  ranked  even  among  second-class  nations  in  the 
foreign  carrying  trade;  that  our  counties,  cities,  and 
tow^ns  are  so  seriousl}^  in  debt  that  tax-payers  are 
looking  to  unlawful  measures  for  relief,  and  that  for 
some  years  past  we,  as  a  people,  have  been  so  extrava- 
gant and  wasteful  that  we  have  become  a  by-word 
throughout  Europe,  are  facts  that  cannot  be  denied. 
Now,  while  this  depression  of  our  manufactures;  this 
improfitableness  of  our  railroads;  this  decline  of  our 
merchant  marine  ;  this  frightful  accumulation  of 
municipal  indebtendess;  this  extravagance  and  wavSte- 
fulness  cannot  be  attributed  exclusively  to  a  redun- 
dant currency,  tlic}^  can  in  a  great  measure  be  traced 
to  it.  Other  causes,  it  is  true,  have  to  some  extent 
assisted  in  producing  the  trouble  in  which  we  are 
involved;  but,  if  we  had  been  on  a  specie  basis,  this 
trouble  would  have  been  small  in  comparison  with  what 
it  is.  Had  there  been  no  over-emission  of  paper  money, 
there  would  have  still  been  depression  in  trade  and 
manufactures,  but  we  should  not  have  been  over- 
whelmed as  we  have  been  with  debt  and  bankruptcy. 
We  should  have  felt  the  effect  of  over-production,  as 
Great  Britain  is  feeling  it.  Enormous  as  has  been  the 
increase  of  consumption  in  civilized  nations  within  the 
last  twenty  3'ears,  it  has  not  kept  pace  with  production. 
The  world  has  of  late  been  pushed  on  too  rapidly.  The 
wonderful  inventions  in  machinery,  the  revolution 
effected  by  steam  power,  and  the  reduction  of  time  in 
international  exchanges,  have  greatly  disturbed  old 
economic  laws.  Production  has  been  immensely  stim- 
ulated by  forces  which  were  not  understood,  or  at  least 
were  not  utilized,  until  long  after  the  commencement  of 
the  present  century,  the  result  of  which  has  been  over- 


149 


production,  reaction,  depression;  and  these  are  felt  in 
the  greatest  measure  in  those  countries  in  which  these 
forces  hav^e  been  most  actively  in  use.  There  arc  very 
few  branches  of  manufacturing  in  Great  Britain — the 
greatest  manufacturing  nation  in  the  world — which  are 
now"  in  a  prosperous  state,  simply  because  there  have 
been  more  goods  manufactured  than  there  is  a  present 
demand  for.  The  same  is  true  in  the  United  States. 
Why,  let  me  ask,  are  so  many  of  our  iron  founderies 
idle?  Why  are  our  w^oolen  and  cotton  mills  running  on 
half  time?  Why  are  our  lumber-yards  over-stocked? 
Why  is  there  so  little  activity  in  ship  building?  Why 
are  our  railroads  so  unprofitable,  and  why  are  so  many 
thousands  of  our  laborers  out  of  employment  ?  Cer- 
tainly not  for  the  want  of  money,  for  money,  paper 
money,  was  never  so  abundant  or  so  cheap,  and  the 
same  would  be  true  of  real  money  if  it  had  not  been 
driven  out  of  circulation  by  the  inferior  currency.  Ask 
our  iron  manufacturers  w^hy  their  founderies  and  forges 
are  not  in  full  operation;  the  managers  of  our  woolen 
and  cotton  mills,  why  their  works  are  partially  sus- 
pended; our  lumber  men,  why  stocks  have  accumu- 
lated on  their  hands;  our  shipbuilders,  why  the}^  are 
not  building  more  ships;  our  railroad  men,  why  their 
roads  are  not  earning  more  money,  and  see  if  the  an- 
swers are  not  of  the  same  tenor — that  manufactures 
have  outstripped  demand,  that  there  is  more  lumber 
than  building,  more  ships  than  freight,  more  railroads 
than  traffic,  more  laborers  than  work.  I  do  not  believe 
that  one  single  sensible  man  among  all  these  classes  of 
producers  and  dealers  can  be  found  who  will  attribute 
the  existing  depression  to  a  scarcity  of  money. 

If  such  are  the  facts,  what  judgment  should  be  pro- 
nounced upon  those  w^ho,  through  wilful  blindness,  or 
for  party  purposes,  or  for  selfish  ends,  declaim,  before 
laborers  suff"ering  from  want  of  employment,  against 
the  oppression  of  capitalists  and  urge  them  to  demand 
more  currency  as  an  antidote  for  their  misfortune. 

I  have  said  that  great  depression  in  trade  and  manu- 
factures exist  in  Great  Britain  as  well  as  in  the  United 
States,  but  there  is  a  marked  contrast  in  the  real  con- 
dition of  the  two  countries.     While  the  existing  depres- 


150 

sion  is  felt,  and  severely,  by  the  manufacturers  and 
dealers  in  Great  Britain,  the  general  state  of  the  coun- 
try is  healthy.  Land  was  never  so  high  or  so  saleable 
as  now ;  the  traffic  upon  English  railroads  was  never  so 
large,  and  notwithstanding  a  reduction  of  taxes,  the  rev- 
enues of  the  Government  are  steadily  increasing;  mu- 
nicipal indebtedness  is  comparative!}^  unknown;  there 
is  no  general  complaint  of  taxation,  and  the  spirit  of 
the  people  is  strong  and  buoyant.  There  have  been 
heavy  failures  (none,  or  very  few,  however,  as  far  as  I 
can  learn,  of  firms  that  have  not  engaged  in  operations 
outside  their  regular  business),  and  fearful  losses  have 
been  sustained  b}^  reason  of  injudicious  investments; 
but  the  nation  is,  as  a  whole,  in  a  satisfactory  financial 
state.  Now,  I  need  not  ask  if  the  reverse  of  this  is  not 
true  of  the  United  States.  The  question,  then,  to  be 
considered  is,  to  what,  in  addition  to  over-production, 
is  the  prostration  of  a  country  so  abundant  in  resources, 
with  a  population  so  intelligent  and  vigorous  as  ours, 
attributable  ?  Is  it  not,  first,  to  our  civil  war  ?  Sec- 
ondly, to  our  redundant  and  vicious  currency?  Thirdly, 
to  injudicious  taxation?  Let  us  dwell  for  a  moment 
upon  the  first  two,  leaving  the  third  for  consideration  at 
some  future  day. 

First,  the  war.  Everybody  knows  that  wars  are  ter- 
ribly destructive  of  property  as  well  as  life,  and  that 
civil  wars  are  especially  so.  The  war  between  the  Gov- 
ernment and  the  Southern  States  was  one  of  the  most 
exhausting  that  has  ever  been  waged.  All  other  civil 
wars  have  been  child's  play  in  comparison  with  it. 
Nothing  like  it,  in  fact,  has  ever  occurred.  During  its 
existence  we  failed  to  comprehend  its  greatness  or  its 
destructiveness.  For  nearly  four  years  some  two  mil- 
lions of  men,  of  the  same  nation,  were  engaged  in  the 
fiercest  and  most  expensive  struggle  that  the  world  has 
ever  witnessed — a  struggle  that  was  ended  with  the 
utter  prostration  of  the  vanquished  section.  During 
the  continuance  of  this  war  everything  necessary  for 
its  prosecution  was  in  demand.  The  manufacture  of 
war  implements,  the  building  of  war  and  transportation 
ships,  the  production  of  food  for  the  support  of  the 
armies,  necessarily  involved  an  advance  in  prices,  atid 


151 

gave  a  stimulus  to  iudustry  which  seemed  to  the  cur- 
sory observer  like  national  prosperity.  Never  were  wages 
so  high,  never  were  fortunes  so  suddenly  made,  never 
was  there  such  a  production  of  materials  that  "perish 
in  the  using,"  never  were  a  people  so  intoxicated  by 
deceptive  appearances.  That  this  prosperity  was  de- 
lusive is  now  apparent,  but  it  did  not  become  apparent 
until  after  the  crisis  of  1873,  for  during  the  war  the 
Government,  to  meet  its  enormous  expenditures,  not 
only  issued  a  vast  amount  of  its  interest-bearing  obliga- 
tions, but  it  made  forced  loans  in  the  form  of  prom- 
issory notes,  and  declared  these  notes  to  be  lawful 
mone}^ 

Secondly,  a  redundant  and  vicious  currency;  redun- 
dant, because  when  the  war  terminated  there  was  no 
legitimate  demand  for  so  large  a  circulating  medium; 
vicious,  because  it  substituted  a  legal  but  artificial 
measure  of  value  for  the  true  measure,  thereby  violat- 
ing the  higher  law  which  makes  gold  and  silver  the 
standard — a  law  which  has  never  yet  been  violated 
without  commercial  disturbance,  nor,  if  the  violation 
was  long  continued,  wnthout  national  disaster. 

That  the  legal-tender  notes  and  the  notes  of  the 
national  banks  made  the  circulating  medium  redundant 
is  proved  by  the  artificial  prices  they  created  and  sus- 
tained by  their  great  depreciation  and  by  the  uses  that 
have  been  made  of  them.  Their  viciousness  is  made 
manifest  by  the  facts  that  they  were  and  are  irredeem- 
able; that  they  have  familiarized  the  people  with  dis- 
honored obligations  which  they  have  been  and  are  com- 
pelled to  treat  as  money;  that  they  were  and  continue 
to  be  constantly  fluctuating  in  value,  making  business 
gambling,  and  business  men  gamblers.  That  an  irre- 
deemable currency  is  a  tax  upon  industry  and  a  fruitful 
source  of  demoralization  requires  no  argument  to  estab- 
Ush.  If  the  truth  could  be  arrived  at  it  would  be  dis- 
covered that  depreciated  paper  money  has  been  a 
heavier  burden  upon  the  industrial  and  producing 
classes  of  the  United  States  than  all  the  taxes,  direct 
and  indirect,  to  which  they  have  been  subjected,  and 
that  it  has  done  more  to  debase  and  corrupt  the  public 
sentiment  than  all  other  causes  combined.     The  substi- 


152 

tution  of  inconvertible  notes  for  coin  is  an  old  game  of 
distressed  monarchies.  It  is  no  new  experiment.  It 
has  been  frequently  resorted  to  by  bankrupt  nations, 
and  always  with  the  same  disastrous  results.  It 
was  resorted  to  by  the  United  States,  under  the 
pressure  of  what  seemed  to  be  a  great  emergency. 
That  it  should  be  adhered  to  so  long  after  the 
supposed  emergency  had  ceased  and  still  have  intel- 
ligent and  honest  advocates,  is  difficult  of  explanation, 
in  view  of  the  fact  that  over-issues  of  paper  money 
have  been  the  cause  of  every  financial  crisis,  every 
deep-rooted  financial  disorder  that  has  occurred  in 
the  United  States.  Let  us  glance  at  our  previous  ex- 
perience: 

The  bank-note  circulation  in  the  United  States  was 
increased  from  $61,000,000  (in  round  numbers)  in  1830 
to  $149,000,000  in  1837;  bank  deposits  from  $55,000,000 
to  $127,000,000;  loans  from  $200,000,000  to  $500,000,000. 
Then  came  the  crash  which  many  of  us  still  remember, 
and  by  which  the  country  was  prostrated  for  years. 

Again,  the  bank-note  circulation,  which  in  1843  was 
$58,000,000,  was  run  up  to  $214,000,000  in  1857;  bank 
deposits  within  the  same  period  from  $56,000,000  to 
$230,000,000;  loans  from  $250,000,000  to  $680,000,000. 
Then  the  second  great  crisis  occurred,  which,  although 
sharper,  and  for  the  time  it  lasted  more  destructive,  was 
of  much  shorter  duration  than  the  former  one.  In  i860 
the  bank-note  circulation  was  $207,000,000;  at  the  pres- 
ent time  the  circulation  of  legal  tender  and  bank  notes 
is  and  for  some  years  has  been  upward  of  $700,000,000, 
while  the  deposits  and  loans  of  the  banks  have  been  in- 
creased in  a  still  greater  ratio.  It  is  asserted,  I  know, 
that  bank  deposits  and  bank  loans  and  not  paper  money 
have  been  the  chief  cause  of  our  financial  crisis,  but 
an  examination  of  the  bank  returns  will  show  that  bank 
deposits  and  bank  loans  have  only  about  kept  pace,  as 
they  naturally  would,  with  the  paper  circulation.  And 
now,  with  over  $700,000,000  of  paper  mone^'  outstand- 
ing, more  than  half  of  which  consist  of  legal  tenders, 
there  are  thousands  of  people  complaining  of  a  scarcity 
of  currency;  some  of  the  leaders  of  a  great  party  are 
advocating  a  larger  supply  of  it.     In  the  early  days  of 


153 

the  West  calomel  was  considered  by  a  set  of  self-styled 
doctors  a  specific  for  all  complaints,  and  when  they  had 
brought  their  patients — some  of  them  naturally  strong 
and  vigorous  men — to  the  brink  of  the  grave  by  liberal 
prescriptions  of  this  mineral  poison,  they  were  quite 
sure  to  administer  more  of  it,  exclaiming  when  their  pa- 
tients died,  as  they  generally  did  under  such  treatment, 
"Poor  fellows!  they  have  gone,  but  it  would  have 
been  all  right  with  them  if  they  had  taken  more  calo- 
mel." Are  not  our  inflation  doctors  disciples  of  the 
same  school  ? 

No  one,  I  admit,  can  say  with  any  precision  how  much 
currency  is  required  in  a  country  like  ours  for  legitimate 
business,  but  there  are  always  indications  of  an  excess 
which  cannot  be  mistaken.  Between  1830  and  1837  it 
was  indicated  by  speculation  in  wild  lands  and  town 
lots;  by  large  importations,  expanded  credit,  and  vision- 
ary schemes  of  internal  improvements.  Between  1843 
and  1857,  by  extraordinary  activity  in  trade,  the  reac- 
tion from  a  long  period  of  stagnation,  and  another  un- 
healthy expansion  of  the  credit  syvStem.  From  1865  to 
1873,  by  a  continuance  of  the  high  prices  which  were 
unavoidable  during  the  war;  by  extravagant  expendi- 
tures; by  gambling  of  all  descriptions;  by  a  mania  for 
sudden  enrichment,  and  by  imprudent  outlays  in  rail- 
roads. There  has  never  been,  I  again  remark,  a  finan- 
cial crisis  in  the  United  States  which  cannot  be  unmis- 
takably traced  to  excessive  issues  of  paper  money.  The 
existing  financial  malady  is  wider  spread  and  deeper 
rooted  than  any  which  has  preceded  it,  because  the  pro- 
pelling cause  has  been  greater.  It  is  more  difficult  to 
cure,  because  a  large  part  of  the  currency  is  of  a  differ- 
ent character  from  that  which  has  heretofore  existed. 
If  it  were  only  bank  notes  that  we  had  to  deal  with,  the 
main  cause  of  our  trouble  would  soon  be  removed,  for 
the  people  would  not  long  tolerate  irredeemable  bank 
note's.  Unfortunately,  we  have  a  currency  issued  by 
the  Government  which,  in  opposition  to  all  economic 
laws,  and  in  disregard  of  the  experience  of  other  nations, 
has  been  made  lawful  money,  which  has  so  distorted 
the  public  vision  and  so  depraved  the  public  judgment 
that^ former  hard-money  men  have  become  its  defend- 


154 

ers;  a  ciirrenc}'  which  has  led  such  men  as  Governor 
Allen,  of  Ohio,  to  pronounce  specie  payment  an  ideal- 
ity— a  "barren  ideality."  If  the  Governor  will  cross 
the  water  and  observe  the  working  of  well-regulated 
banking  systems  in  Scotland  and  England,  in  Germany 
and  other  continental  nations,  he  will,  I  apprehend, 
modify  his  opinions.  He  will  find  that  vSpecie  payments 
are  in  these  countries  a  fixed  fact,  and  not  an  ideality, 
and  that  his  former  well-considered  opinions  were  the 
sound  ones.  But  I  am  making  this  letter  longer  than  I 
intended.  There  ought  not  to  be  much  difference  in 
sentiment  among  fair-minded  men  in  regard  to  the  cause 
of  our  embarrassments  and  prostration.  The  important 
question  to  be  settled,  and  the  difficult  one,  is.  What  is 
the  remedy  for  them  ?  This  question  I  propose  to  con- 
sider hereafter. 

London,  August  2j^  i^75. 


Thirteenth  Letter. 

To  the  Editor  of  The  Tribune  : 

Sir:  With  the  single  exception  of  the  United  States, 
there  is  no  country  in  the  world  in  which  the  holders  of 
its  securities  are  the  objects  of  contumely  and  denuncia- 
tion. The  holders  of  the  United  States  bonds  are  cor- 
porations and  persons  who  subscribed  for  them  at  par 
in  currency,  when  the  Government  was  in  peril,  or  who 
have  purchased  them  since  at  a  premium.  Large 
amounts  of  them  have  changed  and  are  daily  changing 
hands  at  a  considerable  advance  over  their  face  value  in 
gold.  Anyone  who  wants  them,  and  has  the  money  to 
pay  for  them,  can  purchase  them  in  any  of  the  chief 
markets  at  home  or  abroad. 

Our  national  banks  hold  them  because  they  are  com- 
pelled to  secure  by  this  means  their  circulating  notes; 
savings  banks  and  other  trust  companies  hold  them  for 
the  protection  of  their  depositors;  other  corporations  and 
individuals  hold  them  because  they  have  confidence  in 
the  good  faith  and  responsibility  of  the  Government. 
Under  these  circumstances,  is  it  not  strange  that  the 


155 

bond  holders  should  be  denounced  as  monopolists  and 
extortioners?  What  would  be  thought  of  public  speak- 
ers or  journalists  in  England  or  France,  or  Gernian}^  or 
Italy,  or  any  other  country  with  outstanding  obliga- 
tions who  should  endeavor  to  hold  up  to  public  scorn  and 
contempt  the  holders  thereof?  Would  they  not  be  re- 
garded as  public  enemies  or  lunatics,  and  be  treated  ac- 
cordingly? What,  then,  is  the  explanation  of  the  de- 
nunciation of  the  holders  of  Government  bonds  in  so 
many  parts  of  the  United  States?  It  is  not  to  be  found 
(except  where  it  is  resorted  to  to  set  class  against  class 
for  party  purposes)  in  the  fact  that  during  the  war  there 
was  a  body  of  men,  small  in  numbers  (for  the  great 
body  of  the  people,  Democrats  as  well  as  Republicans, 
were  unfaltering  in  their  devotion  to  the  Union),  who, 
not  being  in  sympathy  with  the  Government  in  its  great 
struggle  with  a  gigantic  rebellion,  not  only  declined  to 
be  subscribers  for  the  United  States  bonds,  but  dis- 
suaded others  from  subscribing  for  them  on  the  ground 
that  the  war  would  be  a  failure  on  the  part  of  the  Gov- 
ernment, and  that  its  securities  would  be  worthless,  and 
who  now  give  expression  to  their  spite  and  disap- 
pointment by  denunciations  of  those  whom  they  call 
* 'bloated  bond  holders."  If  those  who  may  take  the 
trouble  to  read  this  letter  will  look  around  them  they 
will  find,  if  I  am  not  greatly  mistaken,  that  not  one  of 
those  who  are  now  denouncing  the  bond  holders  was  an 
earnest  supporter  of  the  Government  throughout  the 
war.  I  recollect  the  time  when  the  subscribers  for 
United  States  bonds  were  regarded  as  patriots,  and  I 
happen  to  know  to  what  class  they  belonged.  With 
rare  exceptions  they  were  not  capitalists;  for  the  capital- 
ists, as  a  class,  permitted  prudence  to  take  the  lead  of 
patriotism,  and  hesitated  to  become  the  purchasers  of 
w^hat  then  were  regarded  doubtful  securities.  They 
were  not  violent  partisans,  whose  opposition  to  the  ad- 
ministration was  stronger  than  their  love  for  the  Union. 
They  were  not  those  who  were  in  sympathy  with  the 
South,  for  Southern  sympathizers  knew  that  the  pro- 
ceeds of  every  bond  that  was  sold  went  to  the  support 
of  the  Federal  soldiers  and  sailors  or  were  used  in  other 
ways  for  the  prosecution  of  the  war.     The  purchasers 


156 


of  our  bonds  were  the  patriotic  men  of  all  parties, 
chiefly  men  of  moderate  means,  who  were  resolved  that 
the  Union  should  be  saved,  no  matter  at  what  cost  of 
money  or  blood. 

"I  have  concluded,"  said  an  old  Pennsylvania  farmer 
to  a  Government  agent,  "I  have  concluded  to  take  a 
couple  more  of  them  United  States  bonds  you  are  selling. ' ' 
(He  had  already  purchased  five  at  $i,ooo  each.)  "My 
neighbor  Jones  says  that  he  doesn't  believe  they  will  be 
good  for  anything,  and  that  he  puts  his  money  into  land, 
but  I  reckon  that  land  wont  be  worth  much  if  the  Union 
is  broken  up.  Besides,"  said  he  with  a  slight  tremu- 
lousness  of  voice,  "I  have  two  boys  with  McClellan  in 
the  Peninsula,  and  the  soldiers  shall  not  want  for  money 
if  I  can  help  it,  so  I  will  take  $2,000  more  of  the  bonds." 
I  trust  the  old  farmer  has  held  on  to  his  bonds  and  that 
now  he  is  one  of  the  "coupon  clippers"  whom  General 
Gary  is  so  roundly  abusing  in  Ohio.  There  were  some 
of  these  neighbor  Joneses  in  all  the  Northern  States,  and 
when  any  of  them  are  now  found  one  will  be  likely  to 
hear  them  denouncing  the  "bloated  bond  holders." 

It  is  undoubtedly  true  that  most  of  those  who  pur- 
chased United  States  bonds  when  the  currency  in  which 
they  paid  for  them  was  worth  much  less  than  it  is  at 
present  have  since  sold  them  at  a  handsome  premium, 
thus  realizing  unexpected  profits  on  their  patriotic  in- 
vestments; but  what  harm,  I  would  ask,  have  the  pur- 
chasers at  home  or  abroad  done  the  Government  or  the 
tax-payers  by  becoming  owners  of  them  that  they  should 
be  subject  to  denunciation  and  abuse  ?  But  I  am  taking 
too  much  time  in  alluding  to  those  w^hose  political  stock 
in  trade  largely  consists  of  abuse  of  "coupon  clippers" 
and  "bloated  bond  holders." 

INFLATION    NO    REMEDY. 

I  intended  that  this  letter  should  be  confined  to  a  con- 
sideration of  the  remedy  for  our  existing  troubles.  I 
will  first  speak  of  the  policies  which  are  advocated,  and 
which  I  am  quite  sure  will  not,  if  adopted,  prove  to  be 
the  remedy  required. 


157 

First.     The  remed}-   is  not  to  be  found  in  a  further 
issue  of  irredeemable   paper.     On  this  point  argument 
ought  not  to  be   needed.     There  are  now  outstanding 
between  $700,000,000  and   $800,000,000  of  legal-tender 
bank-notes,  an  amount  larger  than  can  be  safely  or  prof- 
itably used  in  healthy  trade.     This  is  proved  by  their 
depreciation  and  constantly  fluctuating  value.     No  mat- 
ter what  estimates  may  be  made  of  the  amount  required 
as  a  circulating  medium   in  the  United  States  by  com- 
parison with  the  amount  in  use  in  other  countries,  it  is 
certainly  true  that  not  only  is  there  no  branch  of  indus- 
try in  the  United  States  languishing  for  want  of  currency, 
but   there   is   a  very  large   amount  of  currenc}'  vainl}^ 
seeking  investment.     The  banks  in  commercial  cities 
are  overloaded  with  it — so   overloaded   that   they  are 
lending  "  on  call  "  at  two  per  cent.,  and  are  glad  to  take 
commercial  bills  running  from  three  to  six  months  (of 
which  a  very  small  amount  is  being  offered)  at  five  per 
cent,  per  annum.     Failing   to  find   borrowers   even   at 
these  rates,  they  are  investing  largely,  but,  as  they  hope, 
temporaril}^,  in  securities,  nearly  one-half  the  interest  on 
which  is  absorbed  by   taxes.     This  not  only  indicates 
great  depression  in  manufacturing  and  trade,  but  it  es- 
tablishes the  fact  that  there   is  more  currency  outstand- 
ing than  there  is  legitimate  use  for.     Still,  there   are 
men  all  over  the  country  complaining  of  the  scarcity  of 
currency,  and  attributing  the  financial  disasters  and  in- 
dustrial prostration  which   unfortunately  exist  to   con- 
traction.    Something  less  than  a  year  ago  there  was  a 
convention   or   small  gathering  in   Philadelphia,    com- 
posed of  very  respectable  but  certainly  not  ver}-  fair- 
minded   or  practical  men,  representing  especially    the 
iron  interest  of  Pennsylvania;  and  among  the  resolutions 
adopted  was  one  denouncing  Secretary  McCulloch  for 
contracting  the  currency,  and  attributing  the  depression 
in  the  iron  trade  to  the  policy  he  had  recommended  and 
endeavored  to  carry  out;  and  yet  these  gentlemen  could 
not  have  been   ignorant  of  the   fact  that  iron  of  all  de- 
scriptions, especially  iron  rails,  notwithstanding  the  con- 
traction of  which  they  complained   (which,  in  fact,  ex- 
isted  only   in  their  imaginations),  went  up  enormously 
in  price  between   1868  and  the  spring  of   1873.     They 


158 

must  have  known  that  this  rapid  and  reall}^  unhealthy 
advance  in  iron  was  chiefl}'  owing  to  the  unprecedented 
demand  on  the  part  of  railroads  which  were  being  con- 
structed, and  man}^  of  which  were  undertaken,  by  rea- 
son of  the  plentifulness  of  money,  years  in  advance  of 
the  need  of  them;  the  failure  of  which  has  brought 
dismay  and  ruin  to  thousands  of  households.  Could 
anything  be  more  absurd  than  the  denunciation  of  con- 
traction as  the  cause  of  the  prostration  of  the  iron  inter- 
est in  view  of  the  fact  that  within  a  period  of  less  than 
six  years,  during  which  there  had  been  no  contraction, 
the  price  of  railroad  iron  (other  kinds  of  iron  being  sub- 
ject to  the  same  fluctuations)  advanced  nearly  loo  per 
cent.,  and  then  receded  to  a  point  lower  than  it  had 
ever  before  reached  ?  Can  there  be  any  doubt  that  this 
advance  in  iron  was  owing  mainly,  as  I  have  said,  to 
the  imprudent  expansion  of  our  railroad  system  or  that 
the  decline  was  the  result  of  its  collapse  ?  If  the  with- 
drawal of  the  legal-tender  notes  was  the  cause  of  the 
present  depression,  how  happened  it  that  this  unprece- 
dented advance  in  the  price  of  iron  occurred  after  the 
contraction  complained  of  had  taken  place  ?  Does  not 
the  history  of  the  iron  trade  in  the  United  States  con- 
clusively refute  the  statements  and  arguments,  if  argu- 
ments the}^  can  be  called,  of  the  inflationists  ?  I  submit 
that  this  should  be  regarded  as  a  test. 

Was  there  any  depression  in  prices  or  business  which 
could  fairly  be  attributed  to  contraction?  Was  there, 
in  fact,  any  depression  while  it  was  in  progress  ?  On 
the  contrary,  did  not  the  prices  greatly  advance  after 
the  withdrawal  of  the  legal  tenders  had  taken  place,  and 
did  not  the  collapse  occur  when  the  volume  of  currency 
was  full  ?  The  question  of  the  currency  is  one  of  vast 
importance — of  such  importance  that  all  ordinary  politi- 
cal questions,  in  comparison  with  it,  sink  into  insignifi- 
cance. It  ought  to  be  dealt  with  fairly,  for  the  welfare 
of  40,000,000  of  people  depends  upon  the  proper  solu- 
tion of  it.  Nothing  to  my  mind  is  more  certain  than 
that  our  financial  embarrassments  and  industrial  pros- 
tration are  chiefly  attributable  not  to  a  scarcity  but  to 
a  plethora  of  paper  money,  which  gave  birth  to  specu- 
lative enterprise  and  expanded  credits,  tempted  coun- 


159 

ties  and  cities  to  run  heedlessly  into  debt,  and  became 
the  fruitful  cause  of  extravagance  and  wastefulness 
among  all  classes  of  our  people.  In  the  report  of  the 
Secretary  of  the  Treasury  for  1866  may  be  found  the  fol- 
lowing remarks: 

There  being  but  one  universally  recognized  measure  of  value, 
and  that  being  a  value  in  itself,  costing  what  it  represents  in 
the  labor  which  is  required  to  obtain  it,  the  nation  that  adopts, 
either  from  choice  or  temporary  necessity,  an  inferior  standard 
violates  the  financial  law  of  the  world  and  inevitably  suffers  for 
its  violation.  An  irredeemable  and  consequently  depreciated 
currency  drives  out  of  circulation  the  currency  superior  to  itself, 
and  if  made  by  law  a  legal  tender  while  its  real  value  is  not 
thereby  enhanced,  it  becomes  a  false  and  demoralizing  stand- 
ard, under  the  influence  of  which  prices  advance  in  a  ratio  dis- 
proportioned  even  to  its  actual  depreciation.  Very  different 
from  this  is  that  gradual,  healthy  and  general  advance  of  prices 
which  is  the  effect  of  the  increases  of  the  precious  metals.  The 
coin  which  is  obtained  in  the  gold  and  silver  producing  dis- 
tricts, although  it  first  affects  prices  within  such  districts,  fol- 
lowing the  course  of  trade,  and  in  obedience  to  its  laws,  soon 
finds  its  way  to  other  countries,  and  becomes  a  part  of  the  com- 
mon stock  of  the  nations,  which,  increasing  in  amount  by  the 
regular  product  of  the  mines  and  in  activity  by  the  growing  de- 
mands of  commerce,  advances  the  price  of  labor  and  commodi- 
ties throughout  the  commercial  world.  Thus  the  products  of 
the  American,  Australian,  and  Russian  mines  tend,  first,  to  ad- 
vance prices  in  their  respective  localities,  but  the  operation  of 
trade  soon  distributes  them,  and  enterprise  everywhere  feels 
and  responds  to  the  increase  of  the  universal  measure  of  value. 
All  this  is  healthful,  because  slow,  permanent,  and  universal. 
The  coin  produced  in  any  country  will  be  retained  there  no 
longer  than  its  productions  and  sales  keep  the  balance  of  trade 
in  its  favor.  As  soon  as  it  becomes  cheaper  (if  this  word  can  be 
properly  used  in  regard  to  the  standard  of  value)  in  the  coun- 
try in  which  it  is  produced  than  in  other  accessible  countries, 
or  rather  when  it  will  purchase  more  in  other  countries  (adding 
interest,  the  cost  of  transportation,  and  other  necessary  ex- 
penses) than  in  that  in  which  it  is  produced,  or  when  it  is  re- 
quired to  pay  balances  to  other  countries,  it  flows  to  them  by  a 
law  as  regular  and  as  certain  as  gravitation.  Hence,  although 
the  precious  metals  are  produced  in  considerable  quantities  in 
but  a  few  countries,  they  effect  prices  in  all.  Not  so  with  a 
paper  currency,  which  is  local  in  its  use  and  in  its  influence.  Its 
advantages  when  convertible  are  admitted,  for  if  convertible, 
although  it  swells  the  volume  of  circulation,  it  rather  increases 
enterprise  than  prices.  Its  convertibility  prevents  expansion, 
while  its  larger  volume  gives  impetus  to  trade,  and  creates 
greater  demand  for  labor.  But  when  a  paper  currency  is  an  in- 
convertible currency,  and  especially  when,  being  so,  it  is  made 


160 


by  the  sovereign  power  a  legal  tender,  it  becomes  prolific  of 
mischief.  Then  specie  becomes  demonetized  and  trade  is  un- 
certain in  its  results,  because  the  basis  is  fluctuating;  then  prices 
advance  as  the  volume  of  currency  increases,  and  require,  as 
they  advance,  further  addition  to  the  circulating  medium;  then 
speculation  becomes  rife,  and  "the  few  are  enriched  at  the  ex- 
pense of  the  many;  "  then  industry  declines,  and  extravagance 
is  wanton;  then,  with  a  diminution  of  products  and  conse- 
quently of  exports,  there  is  an  increase  of  imports,  and  higher 
tariffs  are  required  on  account  of  the  general  expansion,  to 
which  they,  in  their  turn,  give  new  stimulus  and  support,  while 
the  protection  intended  to  be  given  by  them  to  home  industr)^ 
is  in  a  great  measure  rendered  imperative  by  the  expansion. 

In  view  of  Avhat  has  happened  since  then,  I  ask  if 
these  remarks  were  not  timel}^  and  true  ? 

I  submit  that  with  the  exception  of  over-production, 
to  which  I  referred  in  ni}'  last  letter,  the  existing  pros- 
tration of  business  and  enterprise  in  the  United  States, 
the  want  of  nerve,  the  lack  of  recuperative  power, 
which  are  everywhere  noticeable,  and  which  are  so  un- 
usual in  the  American  character,  are  attributable  to  the 
excess  and  uncertain  value  of  our  circulating  medium, 
to  which  no  legislation,  without  a  reduction  of  the  vol- 
ume of  it,  can  give  stability;  a  circulating  medium 
which  is  not  only  affected  b}'  the  importation  or  expor- 
tation of  coin,  but  which  is  raised  or  depressed  in  price 
by  gambling  combinations.  Not  only  can  capitalists, 
by  becoming  speculators,  put  up  or  put  down  the  price 
of  gold,  which  means  advancing  or  depressing  the  value 
of  currency  (for,  after  all  that  may  be  said,  it  is  gold 
that  regulates  the  value  of  the  currency),  but  the  prop- 
erty and  business  of  our  great  country  are  to  no  small 
extent  at  their  mercy.  Is  it  not  this  which  is  destroying 
confidence,  which  is  the  main  spring  of  business  vitality  ? 
With  what  safety  can  men  embark  in  enterprises  that 
look  to  the  future  for  results,  when  they  cannot  predict 
with  any  degree  of  certainty  what  will  be  the  value  of 
legal-tender  notes  one  year  or  two  years  hence  ?  How 
can  any  man  venture  to  engage  in  any  far  reaching 
businCvSS  while  the  currenc}'  upon  which  his  transactions 
are  based  is  constant!}'  changing  in  value  ?  Especially 
how  can  he  risk  the  future  when  the  currency,  now 
greatly  depreciated,  ma}^  be  still  more  depreciated  by 
further  issues  ?     It  is  uncertainty  in  regard  to  the  future 


161 


of  the  currency  that  is  destroying  confidence,  and 
without  a  restoration  of  confidence  there  will  be  no  im- 
provement in  our  financial  and  industrial  condition. 
What  healthy  and  reliable  business  requires  is  a  stable 
basis.  Let  men  of  capital  and  enterprise  feel  that  there 
is  to  be  sta])ility  in  the  legal  measure  of  value.  Let 
it  be  understood  that  the  higher  law  which  makes  gold 
and  silver  the  only  true  measure  is  hereafter  to  be  rec- 
ognised and  obeyed,  and  the  existing  lethargy  will  dis- 
appear and  the  country  begin  rapidly  to  recover  from 
its  prostration.  It  is  very  clear,  then,  that  the  remedy 
we  are  seeking  is  not  to  be  found  in  the  maintenance  of 
the  present  volume  of  irredeemable  paper  money — most 
assuredl}^  not  in  an  increase  of  it. 

Other  proposed  policies  for  bettering  our  condition 
will  be  considered  in  my  next. 

London,  September  /,  1875. 


Fourteenth  Letter. 

To  the  Editor  of  The  Tribune: 

Sir:  The  remedy  for  the  existing  trouble  in  the 
United  States  is  not  to  be  found  in  Mr.  Kelly's  plan  of 
regulating  the  currency  and  restoring  prosperity  by 
means  of  an  issue  of  convertible  bonds  bearing  interest 
at  the  rate  of  3  65-100  per  cent.  The  idea  of  a  con- 
vertible bond  originated.  I  think,  wdth  Mr.  Sherman, 
the  difference  between  his  plan  and  Mr.  Kelly's  (and 
it  is  a  very  important  one)  being  in  the  rate  of  interest 
which  the  bonds  were  to  bear.  Mr.  Sherman  proposed 
an  issue  of  five  per  cent,  convertible  bonds,  but  this 
proposition  was  ol3Jected  to  by  the  advocates  of  an  ex- 
clusive paper  currency  on  the  ground  that  it  would  lead 
to  an  early  contraction,  which  would  undoubtedly  have 
been  the  case,  and  in  this  consisted  its  nierit.  Five  per 
cent,  convertible  bonds  would  have  permanently  ab- 
sorbed all  the  notes  not  actually  required  for  a  healthy 
circulating  medium.  They  would  have  accomplished 
in  due  time  what  the  provision  in  the  original  Tender 


162 


Act,  making  the  legal-tender  notes  issued  under  it  con- 
vertible into  five-twenty  bonds,  was  intended  to  accom- 
plish. 

I  am  under  obligations  to  Mr.  vSherman  for  reminding 
me  of  this  excellent  provision,  the  repeal  of  which  he 
so  deeply  regrets,  because  it  shows  conclusively  that 
those  who  voted  for  the  issue  of  the  first  legal-tender 
notes  did  so  with  the  intention  that  they  should  soon  be 
retired  and  not  become  a  permanent  but  should  be  merely 
a  temporary  circulation.  If  the  provision  for  the  con- 
version of  the  notes  into  five-twenty  bonds  had  been 
merely  suspended  during  the  war,  instead  of  being  ab- 
solutely repealed,  the  legal-tender  notes  would  long 
since  have  been  out  of  the  way  and  the  specie  basis 
would  have  been  restored.  Mr.  Kelly's  plan  is  to  make 
the  rate  of  interest  of  the  proposed  convertible  bonds 
so  low  that  they  will  be  a  temporary  investment  only, 
and  rarely  that,  never  permanently  absorbing  the  cur- 
rency. That  measure  is  supported  b}^  the  pronounced 
advocates  of  a  continuous  issue  of  legal-tender  notes 
for  the  purpose  of  keeping  in  circulation  what  experi- 
ence has  proved  to  be  a  vicious  currency.  It  has  not 
a  single  look  towards  specie  payments.  The  rates  of 
interest  are  never  reduced  by  a  redundant  currency; 
on  the  contrary,  they  advance  with  the  advance  of 
everything  else  which  is  measured  by  it.  The  usual 
charge  for  the  use  of  money  in  all,  or  nearl}^  all,  the 
States,  up  to  the  autumn  of  1873,  was  higher  with  a 
volume  of  currency  coming  closeh^  up  to  $800,000,000 
than  it  was  when  the  circulation  of  paper  and  gold  did 
not  exceed  $350,000,000.  The  rates  of  interest  in  the 
United  States  are  not  often  as  low  as  3  65-100  per  cent., 
and  if  this  should  happen,  as  it  sometimes  might,  the 
Government,  if  the  proposed  measure  should  be  adopted, 
would  receive  on  deposit  currency  which  it  could  not 
safely  use,  and  pay  interest  to  the  depositors  for  simply 
being  its  custodian.  It  is  a  measure  which  might  at 
times  reduce  the  deposits  in  banks  and  savings  institu- 
tions, but  it  would  be  troublesome  and  expensive  to  the 
Government  and  add  to  the  burdens  of  tax-payers.  It 
is  a  new  dodge  of  the  expansionists  and  should  receive 
no  support  from  those  w^ho  are  earnestly  in  favor  of  a 
sound  currencv. 


168 

Again,  the  remedy  is  not  to  be  found  in  the  "let- 
alone"  policy.  The're  are  a  great  many  well-meaning 
persons  in  the  United  States  who  admit  that  there  should 
be  no  legal  tender,  but  coin,  and  that  the  present  vol- 
ume of  currency  is  altogether  too  large,  but  they  seem 
to  think  it  prudent  to  "disturb"  things,  and  that  the 
safer  course  is  to  let  the  currency  alone,  in  the  expecta- 
tion that  it  will  be  some  day  needed.  Their  policy  is  to 
let  the  volume  remain  as  it  is  "  until  the  country  grows 
up  to  it."  But  do  not  these  persons  perceive  that  an 
excessive  and  consequently  depreciated  currency,  sub- 
ject to  constant  changes  in  value,  is  in  itself  a  very 
great  disturbance;  that  it  is  this  which  prevents  invest- 
ments in  useful  enterprises,  keeps  a  check  upon  the 
regular  trade,  and  fosters  a  spirit  of  speculations?  The 
United  States  is  a  magnificent  country,  whose  people 
excel  all  others  in  elasticity  and  vigor,  and  can  stand  a 
large  amount  of  bad  legislation.  They  can  live  and  to 
some  extent  be  prosperous  under  laws  that  contravene 
the  well- settled  principles  of  finance  and  political  econ- 
omy, but  is  this  a  reason  why  they  should  not  be 
promptly  relieved  of  unnecessary  burdens?  A  wise 
physician  does  not  so  deal  with  a  patient  struggling 
with  a  dangerous  malady;  he  does  not  stop  to  consider 
whether  a  powerful  constitution  may  not  be  able  to  bear 
up  under  the  disease  without  assistance,  but  he  at  once 
applies  the  remedies  which  books  and  experience  have 
taught  him  will  counteract  it  and  most  speedily  restore 
his  patient  to  health.  The  "let-alone  "  policy  is  not  a 
wise  one  for  the  people  of  the  United  States  to  pursue 
in  dealing  with  a  vicious  currency. 

Nor  is  the  remedy  to  be  found  in  the  destruction  of 
the  national  banks. 

Opposition  to  banks  has  been  the  old  hobby  of  poli- 
ticians of  the  "  tear-down  "  school.  "They  are  soulless 
corporations ;  why  should  we  not  strike  them  ?"  "  They 
are  hard-hearted  monopolists;  why  should  they  be  per- 
mitted to  exist  under  republican  institutions?"  This  is 
their  war  cry.  Now,  what  are  banks?  They  are  sim- 
ply corporations,  created  by  law,  as  the  medium  by 
which  capital  can  be  most  conveniently  diffused,  and  be 
the  most  effective  help  to  productive  industry.     Banks 


164 


of  issue  exist  in  all  commercial  countries,  and  when 
properly  managed  they  have  been  found  to  be  greatly 
beneficial.  Coin  does  not  exist  in  sufficient  quantities 
to  supply  a  circulating  medium  for  the  large  and  varied 
transactions  of  commercial  States,  and  bank-notes,  prop- 
erly secured,  have  been  found  to  be  a  convenient  and 
desirable  substitute  for  it.  Had  it  not  been  so  banks  of 
issue  would  long  since  have  ceased  to  exist.  The  fact 
that  they  have  existed  for  so  many  years  in  the  best 
governed  countries  in  Europe  as  well  as  in  the  United 
States  is  evidence  of  their  utility.  I  have  been  in  En- 
gland for  a  number  of  3^ears,  and  although  I  have  met 
many  who  think  that  this  feature  or  that  in  the  English 
banking  system  might  be  amended,  I  have  yet  to  meet 
an  anti-banking  man.  Banks  of  issue,  as  I  have  said, 
have  been  found  to  be  of  great  value  in  all  well-gov- 
erned countries,  but  the  best  illustration  of  their  utility 
is  to  be  found  in  Scotland,  where  there  are  many  banks 
of  issue,  some  with  limited  and  others  with  unlimited 
liability  of  their  stockholders,  and  where  for  more  than 
fifty  years  there  has  never  been  a  penny  lost  by  their 
depositors  or  note  holders. 

The  Scotch  banks  have  contributed  very  largely  to 
the  prosperity  of  Scotland  in  encouraging  enterprise  and 
extending  trade.  There  is  no  country  in  Europe  in 
which  fewer  restraints  have  been  imposed  upon  bank- 
ing, none  in  which  the  banking  s^'Stem  has  had  so  free 
pla3s  and  there  is  certainl}^  none  that  has  made  so  rapid 
progress  in  development  and  wealth.  The  Scotch  are 
proverbial  for  their  thrift  and  intelligence.  If  banks  of 
issue  had  not  proved  to  be  advantageous  they  would 
not  have  failed  to  discover  it,  and  yet  one  may  travel 
through  all  Scotland  without  finding  a  single  person  who 
is  hostile  to  its  banks  or  who  does  not  assert  or  admit 
their  usefulness. 

The  same  ma}'  be  said  of  the  usefulness  of  most  of 
the  old  banking  institutions  in  the  United  States.  I  can 
speak  with  certainty  of  the  States  west  of  the  Alle- 
ghenies,  and  I  speak  advisedly  when  I  say  that  the  State 
banks  of  Indiana,  the  banks  of  Ohio,  Kentucky,  Louis- 
iana, etc.,  contributed  very  largely  to  the  prosperity 
not  only  of  the  States  in  which  they  were  established,  but 


165 


to  the  prosperity  of  the  entire  Valley  of  the  Mississippi. 
The  people  of  the  New  England  and  the  other  Eastern 
States  can  vouch  for  the  utility  of  their  banking  institu- 
tions. Banks  of  issue  are  coeval  with  the  Government 
of  the  United  States.  Before  the  passage  of  the  National 
Currency  Act  every  State^  with  the  exception  of  perhaps 
two,  had  established  them.  At  the  present  time  there 
is  not  a  State  nor,  if  I  mistake  not,  an  organised  Terri- 
tory in  which  national  banks  have  not  been  organized. 
The  old  sj^stem,  which  was  superseded  by  the  present 
system,  was  defective  in  respect  to  the  want  of  trust- 
worthy security  for  the  circulating  notes  in  their  local 
character  and  the  absence  of  uniformity  in  their  ex- 
changeable value.  The  national  banks,  with  the  excep- 
tion of  a  comparativel}^  few  new  ones,  are  the  old  State 
banks,  simply  reorganized  with  the  same  stockholders 
and  under  the  same  managers,  but  with  a  circulation  of 
uniform  value  throughout  the  length  and  breadth  of 
the  land — a  circulation  which  is  so  well  secured  that  if  the 
United  States  notes  were  out  of  the  way  there  would  not  be. 
a  single  dollar  of  paper  money  in  circulation  in  the  United 
States  not  protected  by  more  than  the  equivalent  of  a 
dollar  in  coin,  deposited  in  the  Government  Treasury. 
Deposits  in  banks  are  made  for  the  convenience  of  de- 
positors, who  usually  receive  a  consideration  for  them. 
These  the  Government  does  not  undertake  to  protect, 
except  so  far  as  the  requirements  of  the  law  and  fre- 
quent examinations  may  protect  them;  but  it  has  under- 
taken to  provide,  and  it  has  provided  by  the  national 
banking  system,  that  all  bank-notes  in  circulation  shall 
be  secured  to  the  holders  beyond  a  reasonable,  if  not 
possible,  contingency.  I  claim  no  share  in  the  credit  of 
the  paternity  of  the  national  banking  system.  The  only 
lobb^dng  that  I  was  ever  guilty  of — and  of  that  I  am 
heartily  ashamed — was  in  opposition  to  it.  I  was  then 
at  the  head  of  the  bank  of  the  State  of  Indiana,  a  large 
and  profitable  institution,  under  the  management  of 
tried  and  able  men,  which  I  knew  to  be  sound  to  the 
core,  and  which  I  foresaw  must  go  into  liquidation  or 
surrender  its  privilege  of  issuing  two  dollars  for  one  on 
its  capital,  if  the  new  banking  system  went  into  opera- 
tion.    The  onl}^  credit  I  claim  in  regard  to  the  present 


166 

system  is  for  the  organization  of  the  Bureau,  which,  I 
think,  my  successors  have  had  no  reason  to  complain 
of,  and  for  my  earnest  efforts  to  give  to  the  new  system 
a  fair  trial.  It  grew  into  favor  with  me  day  by  day,  and 
I  have  now  no  hesitation  in  saying  that,  for  the  United 
States,  it  is  not  only  vastly  superior  to  the  system  which 
it  superseded,  but  that  it  is  the  best  system  which  has 
been  or  is  likely  to  be  devised. 

The  nationalbanking  system  was  not  the  offspring  of 
the  State  banks.  When  I  went  to  Washington  at  the 
request  of  Mr.  Chase  in  the  spring  of  1863  to  organize 
the  Bureau  it  had  not  a  single  friend  among  the  banks. 
The  managers  of  sound  and  well-conducted  banks  were 
opposed  to  it,  because  by  bringing  their  banks  into  it 
they  feared  that  the  profits  of  their  shareholders  would 
be  diminished  and  because  they  dreaded  the  constant 
annoyance  to  which  they  feared  they  would  be  subjected 
from'  intermeddling  politicians  and  journalists.  The 
managers  of  the  banks  of  a  different  character  were  op- 
posed to  it  because  it  required  absolute  security  to  be 
deposited  with  the  Treasurer  for  the  redemption  of  the 
circulating  notes.  The  State  banks,  in  fact,  came  into 
the  system  by  compulsion;  but  there  are  now,  I  appre- 
hend, very  few  intelligent  and  upright  bankers  who  do 
not  admit  the  wisdom  of  the  act  and  the  excellence  of 
the  system.  Fortunate  for  the  country  was  it  that  the 
Government  did  not  undertake  to  collect  its  revenues  or 
pay  its  soldiers  in  the  notes  of  suspended  State  banks, 
the  weakest  of  which  would  have  maintained  the  largest 
circulation.  Mr.  Chase  not  only  secured  by  the  National 
Currency  Act  for  the  whole  people  a  sound  and  uniform 
circulation,  but  he  thus  prevented  a  catastrophe  which 
might  have  been  fatal  to  the  Union,  and  which  certainly 
would  have  been  calamitous  to  the  country.  The  national 
banking  system  was  one  of  the  compensations  for  the 
war,  and  if  its  distinguished  author  had  rendered  no 
other  service  to  his  country,  he  would,  by  having  de- 
vised it,  have  been  entitled  to  the  lasting  gratitude  of 
his  countrymen.  It  is  this  system,  so  beneficial  to  the 
whole  country,  and  so  indispensible  to  the  newer  portion 
of  it,  that  some  politicians  are  endeavoring  to  overthrow 
with  the  intention  of  supplying  the  place  of  the  bank- 


167 

notes,  which  are  to  be  retired  by  a  further  issue  of  legal- 
tender  notes,  which  further  issue  would  postpone  indefi- 
nitely a  return  to  specie,  centralize  the  entire  money 
power  of  the  nation  in  the  Federal  Government,  and  in- 
conceivably aggregate  the  evils  which  now^  affect  us. 

Our  banking  system  is  thoroughly  interwoven  with  all 
our  pecuniary  interests.  It  could  not  be  overthrown 
without  the  most  disastrous  consequences.  Its  destruc- 
tion would  not  only  put  a  stop  to  bank  discounts,  but  it 
would  necessitate  the  collection  of  millions  upon  mil- 
lions of  debts  due  to  the  banks.  It  would  create  a 
financial  revolution  which  the  country  is  in  no  condition 
to  bear.  I  know  it  may  be  contended  that  the  opposi- 
tion to  banks  means  only  opposition  to  them  as  banks 
of  issue;  that  to  deprive  them  of  the  privilege  of  issuing 
notes  by  no  means  involves  the  necessity  of  their  ceas- 
ing to  continue  in  existence  as  banks  of  deposit  and  dis- 
count. It  may  be  true  that  if  the  banks  were  compelled 
to  call  in  their  circulation  some  of  them  would  go  on 
with  the  business  of  receiving  deposits  and  discounting 
bills,  but  I  apprehend  that  a  large  majority  would  go 
into  liquidation.  If  they  did  not  what  would  the  people 
gain  by  the  change  ?  Are  the  legal-tender  notes  any 
safer  than  bank-notes  w^hich  are  secured  by  United  States 
bonds  with  ten  per  cent,  margin  and  by  the  capital  of 
the  banks  and  the  personal  liability  of  their  stockholders  ? 
Would  the  banks,  as  banks  of  deposit  and  discount,  be 
more  liberal  in  their  dealings  with  their  customers  or  in 
their  rates  of  interest?  Would  they  be  any  less  liable 
to  the  charge  of  being  monopolists  and  extortioners  than 
they  now  are  ?  What  the  West  especially  needs  is  a 
local  circulation.  Would  it  have  this  local  circulation 
if  greenbacks  became  a  substitute  for  bank-notes?  I 
predict  if  the  experiment  is  ever  tried,  that  before  a  year 
passes  there  will  be  in  all  the  Western  and  Southern 
States  an  outcry  against  the  greenback  system,  and  a 
demand  for  the  restoration  of  the  system  which  is  now 
so  vehemently  denounced.  The  financial  history  of  the 
United  States  shows  that  the  people  of  the  United  States 
will  have  banks  and  banks  of  issue.  If  the  national 
banking  system,  which  affords  a  circulation  of  uniform 
value  and  unquestionable  security,  is  to  be  discontinued 


168 

another  S3^stem  must  be  devised  to  take  its  place.  What 
shall  it  be?  Has  any  substitute  for  it  been  proposed ? 
Would  it  not  be  wise  and  prudent  for  us  to  present  a 
better  system  or  to  improve  the  one  we  have  until  a  bet- 
ter one  is  proposed?  The  present  system  is,  as  I  have 
remarked,  manifestly  superior  to  the  one  it  superseded. 
It  affords  the  people  the  uniform  and  safe  circulation 
which  they  had  long  desired.  It  is  in  no  proper  sense 
a  monopoly.  It  is  in  this  respect  free  from  the  objec- 
tions which  were  raised  against  the  old  United  States 
Bank.  It  is  substantially  a  free  banking  system,  emi- 
nently adapted  to  our  republican  institutions.  As  far  as 
I  can  judge,  it  has  so  far  worked  well.  Let  us  have  a 
proposition  for  an  improved  system  before  we  lay  our 
destructive  hands  upon  it. 

I  have  in  this  hasty  manner  stated  my  objections  to 
certain  remedies  which  are  proposed  and  advocated  for 
lifting  the  country  out  of  existing  eml)arrassments.  I 
must  postpone  the  consideration  of  what  I  consider  to  be 
the  true  remedy  for  another  week. 

lyONDON,  September  2,  18 js. 


FiFTKENTH  Letter. 

To  the  Editor  of  The  Tribune: 

^  Sir:  By  what  means,  then,  is  the  country  to  be  re- 
lieved from  the  existing  embarrassments  ?  To  my  mind, 
the  answer  is  a  very  simple  one — by  industry  and  econ- 
omy, by  earning  more  and  spending  less,  by  the  restora- 
tion of  confidence;  in  a  word,  by  a  return  to  the  true 
measure  of  value,  a  departure  from  which  has  done 
more  than  anything  and  everything  else  to  land  us  where 
we  are.  Confidence  certainly  will  not  be  restored  nor 
lousiness  rest  upon  a  substantial  footing  until  this  is 
brought  about. 

The  experiment  we  have  been  trying  for  some  years 
past  of  sulxstituting  inconvertible  paper  for  coin,  of  en- 
deavoring by  a  legislative  enactment  to  give  a  value  to 
promises  which   they  do  not  possCvSS,  is  not  an  original 


169 

one.  It  lias  not  even  the  gold  of  novelty  to  recommend 
it.  It  has  been  tried  on  both  sides  of  the  Atlantic,  and 
always  with  disastrous  results. 

Some  years  ago  my  excellent  friend,  Charles  Beecher, 
who  was  then  living  with  me  at  Fort  Wayne,  and  who 
had  among  his  other  gifts  a  talent  for  invention,  dis- 
covered, as  he  thought,  a  new  method  of  propelling 
steamships.  The  more  he  thought  and  the  more  he 
read  upon  the  subject  the  more  confident  he  became 
that  he  had  made  a  discovery  which  would  not  only  be 
of  great  gain  to  the  world,  but  which  would  secure  to 
himself  fame  and  fortune.  Before  applying  for  a  pat- 
ent, however,  he  thought  he  would  bring  the  matter  to 
the  attention  of  some  one  on  whose  judgment  he  could 
rely.  He,  therefore,  wrote  to  his  brother,  Thomas  K. 
Beecher,  then  living  in  Cincinnati,  and  who,  had  it  not 
heen  foreordained  that  all  the  Beecher  brothers  should 
be  ministers  of  the  Gospel,  would  have  undoubtedly  be- 
come one  of  the  greatest  mechanics  of  the  age,  de- 
scribed to  him  his  new  process  of  propulsion  and  re- 
quested that  he  should  say  what  he  thought  about  it. 
Although  he  afterwards  had  a  good  laugh  over  it,  I  shall 
not  soon  forget  the  shade  of  disappointment  which 
passed  over  Charles'  intellectual  face  when  he  read  his 
lirother's  laconic  reply,  which  was  as  follows: 

DEAR  ChArt^Ey:  I  have  examined  your  proposed  method  of 
propelling  steamships.  I  see  but  two  objections  to  it.  First, 
is  is  an  old  invention;  second,  it  is  good  for  nothing. 

Yours,  affectionatel3s  Tom. 

If  Tom  could  have  gone  further  and  said,  "  Your  pro- 
cess is  not  only  an  old  and  worthless  one,  but,  instead 
of  driving  ships  more  rapidly  through  the  water,  it  has, 
wherever  it  has  been  tried,  invariably  sunk  them,''  he 
would  have  given  substantially  such  an  answer  as  might 
now  be  given  to  those  who  think  the  way  to  make  money 
plenty  is  by  the  free  use  of  the  printing  press,  and  that 
all  a  Government  has  to  do  to  create  money  is  to  decree 
that  its  promises  to  pay  shall  be  money — the  higher  law 
that  has  been  in  force  since  man  begun  to  trade  with  his 
fellow  to  the  contrary  notwithstanding. 


170 


THE   TRUE    MEASURE    OF   VAEUE. 

Some  time  after  the  close  of  the  late  civil  war  I  met 
a  Virginian  who  contended  that  the  failure  of  the  South 
to  establish  its  independence  was  attributable  to  its 
financial  condition.  He  related  to  me  an  incident  which 
I  will  repeat,  as  nearly  as  I  can  recollect,  in  his  own 
language: 

"  I  knew,"  said  he,  "  that  our  Confederate  notes  which 
had  been  made  a  legal  tender  were  terribl}'  depreciated, 
but  a  little  purchase  that  I  made  brought  the  fact  home 
to  me  very  forcibly.  As  I  was  walking  along  one  of  the 
streets  of  Richmond  with  some  of  my  friends  from  the 
country,  a  short  time  before  the  fall  of  the  city,  I  ob- 
served in  the  shop-window  of  a  shop  some  fine  apples 
for  sale.  Thinking  that  it  would  be  a  nice  thing  to  treat 
each  of  ni}-  friends  to  an  apple,  which  was  then  a  very 
rare  fruit  in  Richmond,  I  stepped  into  the  shop  and  said 
to  the  dealer,  '  How  much  for  your  apples  ?  '  '  Three 
dollars  apiece,'  was  the  reply.  '  Three  dollars  apiece  ! ' 
I  exclaimed;  '  that  is  an  outrageous  price  for  apples.' 
'  Can't  help  it,'  said  the  dealer,  '  it  is  as  cheap  as  I  can 
afford  to  sell  them.'  There  were  eight  in  the  party  and 
$24  was  rather  more  than  I  could  conveniently  spare  at 
the  time,  but  as  I  had  undertaken  to  do  a  clever  thing  I 
did  not  like  to  back  down,  so  I  said  to  the  dealer,  '  The 
price  is  extravagant,  but  I  will  take  eight  of  the  apples.' 
The  apples  were  placed  upon  the  counter,  and  as  I  was 
taking  out  my  wallet  to  pay  for  them  it  occurred  to  me 
that  I  had  two  half  dollars  in  silver  in  ni}^  pocket,  and 
that  it  would  look  better  to  pay  for  the  apples  wnth  them 
than  with  the  Confederate  notes;  so,  involuntarily 
almost,  I  threw  both  pieces  down  upon  the  counter,  re- 
marking, '  Perhaps  that  will  pay  for  them.'  '  Oh,  5^es,' 
said  the  dealer,  seizing  the  half  dollars,  and  hastily  drop- 
ping them  into  his  till,  '  that  will  pay  for  them  and  leave 
you  some  change.'  I  took  the  apples  and  he  handed 
me  back  the  change,  and  how  much  do  you  think  the 
change  was?  Why,  sir,  thirty  six  dollars  in  Confeder- 
ate notes.  '  Do  you  think,  sir,  said  he,  '  that  we  could 
continue  the  war  with  a  currency  like  that?  '  " 

The  real   dollar,  in  this  case,  showed  its  purchasing 


171 


power  over  the  inconvertible  paper  dollar,  and  so  it  al- 
ways will;  this  it  did  over  Continental  notes,  this  over 
the  French  assignats,  and  so  it  shows  its  power,  to  some 
extent,  over  our  own  legal-tender  notes.  Gravitation  is 
not  more  certain  than  is  that  law  which  makes  gold  and 
silver  the  measure  of  value.  We  may  argue  against  it, 
we  may  struggle  against  it,  but  it  is  a  law  which  is  as 
irresistible  as  fate.  The  value  of  irredeemable  cur- 
rency depends  not  upon  the  law  which  authorizes  its 
issue  and  fixes  a  legal  value  upon  it,  but  upon  the  re- 
sponsibility of  the  Government  that  issues  it,  the  pur- 
poses for  which  it  can  be  used,  and  the  amount  in 
circulation.  Our  legal-tender  notes  are  not  greatl}^ 
depreciated;  because  the  United  States  are  a  great 
nation,  rich  in  undeveloped  resources,  if  not  in  actually 
acquired  wealth;  because  these  notes  are  receivable  for 
all  public  dues,  except  duties  upon  imports;  but  chiefly 
because  the  amount  of  issue  is  limited.  I^et  this  limita- 
tion be  removed  and  further  issues  be  authorized,  and 
we  shall  find  that  every  dollar  thus  added  to  the  circu- 
lation will  be  marked  by  an  equal,  if  not  greater,  depre- 
ciation in  the  exchangeable  value  and  purchasing  power 
of  the  outstanding  notes. 

Does  any  man  suppose,  if  the  circulation  of  legal- 
tender  notes  were  increased,  as  some  are  desirous  that 
it  should  be,  to  two  thousand  millions,  that  there  would 
be  any  more  real  money  in  the  country  by  reason  of  this 
increase  ?  Suppose  Congress  should  change  our  stand- 
ard of  measure  and  enact  that  thirty  pounds,  instead  of 
sixty  pounds,  should  be  a  bushel  of  wheat,  would  wheat 
thereby  be  advanced  in  value  or  would  the  farmer  get 
any  more  for  his  crops  than  he  would  get  under  the 
present  measure?  Is  any  man  richer  by  having  ^^loo  of 
legal-tender  notes  in  his  pocket  than  he  would  be  if  he 
had  $85  in  gold  ? 

The  eagle  is  worth  ten  dollars,  according  to  our  ex- 
isting standard.  Would  it  be  worth  that  if  fifty  per 
cent.,  twenty  per  cent.,  or  ten  per  cent,  were  substituted 
for  the  same  percentage  of  gold  that  it  contains?  The 
eagle  is  w^orth  what  it  is  because  it  has  232  grains  of 
pure  gold  in  it,  and  not  because  it  bears  the  Govern- 
ment stamp  or  impress  upon  it.     When  the  eagle  or  the 


172 

sovereign  or  the  twenty-franc  piece  crosses  the  Atlantic 
it  is  assayed,  and  it  is  received  for  just  what  gold  it  con- 
tains, and  no  more.  All  the  acts  of  Congress  between 
now  and  doomsda}'  can  give  to  our  coin  no  value  which 
it  does  not  intrinsically  possess.  The  same  is  true  of 
our  Government  paper  cLlrrenc^^  No  act  of  Congress 
can  give  it  a  value  be3-ond  its  convertible  value.  It  ma}^ 
be  prevented  from  great  depreciation,  it  may  have  an 
artificial  value  by  being  received  for  taxes,  etc.,  and  b}^ 
a  limitation  of  its  issue,  but,  beyond  this.  Congress  is 
utterly  powerless  in  fixing  a  value  upon  it,  without  pro- 
viding for  its  redemption.  Gold  and  silver  have  been 
made,  b}^  the  universal  consent  of  all  nations,  and  not 
by  any  act  of  sovereign  power,  the  standard  of  value; 
because  they  cost  in  labor  all  that  they  represent;  be- 
cause the  supply  is  limited,  and  because  the}'  are  the 
most  beautiful  and,  in  many  respects,  the  most  valuable 
of  metals,  possessing  a  value  in  themselves  independent 
of  the  demand  for  coinage.  An  ancient  potentate  at- 
tempted to  get  rid  of  this  higher  law  and  to  make  iron 
a  substitute  for  gold,  but  his  experiment  was  not  so 
happy  in  its  results  as  to  be  followed  by  anyone  else. 
Suppose  Congress  should  undertake  to  substitute  nickel 
for  gold  and  should  decree  that  a  piece  of  nickel  of  the 
size  of  an  eagle  should  be,  between  man  and  man  and 
for  public  dues,  receivable  as  an  eagle,  would  it  thereby 
possess  the  value  of  one  ?  This  would  be,  undoubtedly, 
an  act  of  folly,  but  would  it  be  any  more  unwise  than 
the  present  legal- tender  acts,  by  w^hich  legal-tender  notes 
are  attempted  to  be  made  a  substitute  for  coin  ?  In  one 
respect  the  nickel  coin  would  be  preferable  to  notes,  be- 
cause it  would  relieve  the  Government  from  the  charge 
of  dishonesty  which  now  rests  upon  it — of  making  its 
promises  a  legal  tender  without  redeeming  them.  One 
of  the  severest  charges  ever  brought  against  dishonest 
and  impecunious  monarchs  was  that  of  adulterating  the 
coin.  This  there  has  never  been  a  people  degraded 
enough  long  to  endure,  nor  a  monarch  powerful  enough 
to  enforce,  and  yet  are  not  the  free  and  intelligent 
people  of  the  United  States  virtually  doing  the  same 
thing?  We  are  not,  it  is  true,  debasing  the  coin,  but 
we  are  substituting  for  it  an  inferior  legal-tender  cur- 
rency, which  substantially  amounts  to  the  same  thing. 


173 


Our  people  would  not  sustain  Congress  for  a  day  if  it 
should  attempt  to  adulterate  our  gold  coinage.  It  would 
be  worth  a  voyage  across  the  Atlantic  to  hear  General 
Butler  (of  whose  ability  and  eloquence  there  can  be  no 
doubt,  whatever  may  be  thought  of  his  financial  theo- 
ries) denounce  it,  and  yet  he  repudiates  coin  as  a  meas- 
ure of  value,  and  is,  as  I  understand,  an  advocate  of  fur- 
ther issues  of  legal-tender  notes.  How  did  this  elastic 
currenc^^  which  was  to  prevent  all  panics,  answer  the 
purpose  in  November  and  December,  1873?  When  be- 
fore did  it  happen  that  the  great  banks  in  New^  York 
were  unable  to  pay  even  the  smallest  checks  of  their  de- 
positors? There  was  never  before  such  a  "lock-up" 
under  the  sun,  never  such  a  panic  as  occurred  with  out- 
standing notes  to  the  amount  of  nearly  ^800,000,000,  a 
panic  w^hich  was  not  relieved  by  an  issue  of  $26,000,000 
of  the  legal  tenders,  and  which  was,  in  fact,  aggravated 
by  an  importation  of  $15,000,000  of  coin.  Gold  and 
silver  coins,  instead  of  being  what  some  of  the  infla- 
tionists in  Ohio  call  them — "a  relic  of  barbarism" — are 
the  great  financial  regulator  of  commercial  nations,  in- 
dicating by  their  movements  unerringly  when  a  nation 
is  going  too  fast  and  putting  on  the  check  before  the 
movements  become  dangerous. 

General  Butler  thinks  that  a  currency  which  was  good 
enough  to  pay  the  soldiers  during  the  war  is  good  enough 
for  civilians;  that  as  legal  tenders  answered  the  purpose 
for  which  they  were  issued  while  hostilities  continued 
they  ought  to  answer  the  purpose  of  a  circulating  me- 
dium long  after  the  war  had  been  brought  to  a  success- 
ful close.  The  soldiers  in  the  War  of  the  Revolution 
were  paid  in  Continental  notes,  but  in  those  days  of  in- 
tellectual darkness  this  was  not  considered  a  sufficient 
reason  for  their  being  maintained  as  a  permanent  circu- 
lation. The  soldiers  of  the  Revolutionar}^  War  were 
paid  in  Continental  notes  because  the  people  had  noth- 
ing better  to  pay  them  in.  Every  effort  of  the  colonies 
and  of  the  Continental  Congress  failed  to  give  them 
value  after  the  amount  had  become  excessive.  They 
answered  for  the  time  an  important  purpose,  but  nothing 
could  prevent  their  utter  depreciation.  The  Federal 
Government  could  not  assume  the  payment  of  them,  and 


174 


they  became  as  valuele.ss  as  the  paper  upon  which  they 
were  printed.  Our  legal-tender  notes  were  issued  as  a 
war  measure,  and  if  the}^  answered  the  purpose  for 
which  they  were  issued,  does  it  follow  that  they  should 
be  maintained  as  a  circulating  medium?  They  should 
be  withdrawn,  because  they  keep  specie  out  of  circula- 
tion, and  prevent  the  restoration  of  a  specie  standard; 
because  the  dut}^  of  Congress  under  the  Constitution  is 
to  coin  money  and  to  regulate  the  value  of  foreign  coins, 
not  to  print  notes  and  force  them  upon  the  people  at  a 
value  they  do  not  possess.  The  original  issue  for  war 
purposes  was  an  act  of  doubtful  expediency  and  still 
more  doubtful  authority.  It  certainly  violated  a  well- 
settled  principle  of  finance  and  political  econom3^  Is 
there  not  a  practical  question  of  another  kind  also  in- 
volved in  an  authority  on  the  part  of  Congress  to  issue 
notes  for  a  currency?  If  the  amount  to  be  issued  should 
continue  to  be  limited  by  law  what  would  prevent  a 
party  in  power  from  repealing  the  law,  and  continuing 
its  power  by  the  use  of  this  tremendous  leverage  ?  Is 
there  ar  Democrat  in  the  country  who  would  consent  that 
such  a  power  should  be  lodged  in  the  hands  of  a  Repub- 
lican, or  a  Republican  who  would  be  willing  to  intrust  it 
to  a  Democrat  ?  If  this,  to  my  mind,  very  serious  objec- 
tion, and  the  other  objections  that  have  been  made  to 
the  legal-tender  notes,  could  be  overcome  it  would  still 
be  found  that  they  would  not  meet  the  wants  of  a  com- 
mercial and  trading  people — that  they  could  not  be  the 
flexible  and  yet  stable  currency  which  business  requires. 
If  we  ever  entirely  emerge  from  our  existing  embarrass- 
ment it  will  be  by  returning  to  first  principles,  by 
confining  Congress  to  its  legitimate  power  of  coining 
money,  and  by  leaving  the  question  of  the  currency  to 
be  settled  under  a  sound  banking  system  by  the  laws  of 
trade.  The  legal- tender  notes  should  not,  in  my  judg- 
ment, take  the  precedence  of  bank-notes,  for  the  reasons 
which  I  have  already  named,  and  because  they  will  not 
afford  the  country,  especially  the  Western  and  Southern 
portions  of  it,  the  local  circulation  they  need;  because 
they  represent  debt  and  debt  only,  while  bank-notes  rep- 
resent bonds  which  have  been  deposited  with  the  Gov- 
ernment for  their  redemption — the  capital  of  the  banks 


175 


and  notes  and  bills  under  discount;  in  other  words,  busi- 
ness transactions. 

The  remedy  we  seek,  then,  is  to  be  found — and  in  my 
judgment  to  be  found  only — in  the  gradual  retirement 
of  the  legal-tender  notes  and  in  fixing  a  time  after  which 
they  shall  cease  to  be  a  legal  tender.  Whatever  is  done 
should  not  be  done  hastily,  but  the  time  for  tempori/jng 
has  ceased.  Action,  and  decided  action,  upon  a  matter 
of  so  great  importance  ought  not  to  be  longer  postponed. 
If  I  were  a  member  of  Congress,  my  first  act  would  be 
to  introduce  a  bill  making  the  United  States  notes  at 
once  convertible  into  bonds  bearing  interest  at  the  rate 
of  four  or  four  and  a  half  per  cent,  in  gold,  with  a  pro- 
vision that  bank-notes  to  an  amount  equal  to  the  notes 
which  may  thus  be  retired  may  be  issued  if  required 
by  the  banks  and  that  from  and  after  the  first  day  of 
January,  1878,  the  United  States  notes  shall  cease  to  be 
a  legal  tender.  Should  there  be  at  that  time,  or  at  any 
time,  an  excess  of  bank-note  circulation,  the  excess 
would  be  of  short  duration.  What  were  not  needed  for 
use  would  be  sent  home  for  redemption.  If  the  banks 
were  unable  to  redeem  them  they  would  go  into  liqui- 
dation and  their  notes  would  be  redeemed  at  the  United 
States  Treasury.  The  passage  of  such  an  act  would,  in 
my  judgment,  tend  at  once  to  prevent  coin  from  flowing 
out  of  the  country  and  to  restore  confidence  in  the  future. 
It  is  disheartening  to  think  that  the  products  of  our  mines, 
averaging  from  $70,000,000  to  $100,000,000  per  annum, 
have  been  going  steadily  out  of  the  country  since  1848, 
with  so  little  to  show  for  them.  Unless  steps  are  taken 
to  prevent  it  this  outflow  will  still  continue.  Let  it  be 
understood  that  the  specie  standard  is  to  be  restored 
within  the  next  two  or  thee  years,  and  this  outflow 
would  cease,  or  be  rapidly  diminished,  not  so  much  by 
a  diminution  of  imports  as  by  a  restoration  of  confidence 
and  an  increase  of  enterprise  and  production,  which 
would  so  enlarge  our  exports  that  coin  would  not  be  in 
much  demand  for  the  payment  of  our  foreign  debt. 
The  golden  opportunity  for  returning  to  specie  pay- 
ments was  lost  at  the  close  of  the  war,  when  individual 
and  corporation  indebtedness  was  small  in  comparison 
with  what  it  is  at  present.     Nothing  can  be  gained,  how- 


176 

ever,  by  further  delay  in  getting  again  upon  the  right 
track.  On  the  contrary,  every  day's  delay  renders  the 
return  to  it  more  difficult.  I  know  that  one  difficulty 
which  shows  itself  is  the  large  amount  of  our  bonds. 
Federal,  State,  and  corporate,  which  are  held  by  for- 
eigners; but  Europe  is  rich.  Her  capitalists  need  our 
solvent  securities,  and  all  that  is  necessary  to  prevent 
their  being  returned  when  we  are  not  prepared  to  re- 
ceive them,  is  confidence  on  the  part  of  the  holders  that 
the  interest  will  be  promptly  paid.  Nothing  will  do  so 
much  to  create  this  confidence  as  an  honest  currency  at 
home. 

A  gentleman  in  New  York  who  is  presumably  sane,  as 
his  friends  have  not  sent  him  to  an  asylum,  has  recently 
published  a  pamphlet  containing  a  copy  of  a  letter  said 
to  have  been  written  to  me  in  1865,  with  comments 
under  date  of  July  last,  one  of  which  comments  is  as 
follows:  "  Is  it  not  a  historical  fact  that  the  Hon.  Hugh 
McCuUoch  did  of  himself  knowingly  '  do  the  deed,'  and 
will  not  the  curse  of  the  hundreds  of  thousands  whom 
his  policy  of  contraction  hurled  from  affluence  to  poverty 
enshroud  his  name  with  ingominy  forever?"  If  this 
is  not  the  raving  of  a  madman  what  is  it?  I  did,  of  my 
own  accord,  without,  as  is  alleged  in  succeeding  com- 
ments, the  advice  of  my  highly  valued  and  very  able 
friend,  Mr.  Lanier,  or  of  anyone  else,  ask  Congress,  in 
my  first  report  as  Secretary  of  the  Treasury,  to  author- 
ize me  gradually  to  retire  the  legal-tender  notes  until 
they  should  become  equal  in  purchasing  power  to  coin; 
and  now  after  long  reflection  and  careful  observation  of 
the  effect  of  such  notes  upon  business  and  the  public 
morals,  my  only  regret  is  that  Congress  prevented  me 
from  carrying  out  the  good  work  so  auspiciously  com- 
menced. Had  the  policy  of  contraction  been  sustained 
the  country  would,  long  since,  have  been  on  the  full  tide 
of  prosperity,  and  the  bankruptcy  and  ruin,  which  this 
writer  attributes  to  contraction,  would  not  have,  occurred. 
There  has  been,  in  fact,  no  currency  contraction,  as  the 
withdrawal  of  greenbacks,  as  has  been  stated,  has  been 
more  than  made  up  by  an  increase  of  bank-notes.  The 
contraction  of  the  greenback  circulation  in  no  wise  af- 
fected  business;    indeed,  the    public   would   not  have 


177 


known  that  it  was  in  progress  but  for  the  monthly  state- 
ment of  the  Treasury.  If  I  am  chargeable  with  the 
panic  of  1873  and  its  consequences,  ought  I  not  to  be 
credited  with  something  for  the  good  times  which  were 
boasted  of  after  the  S44,ooo,ooo  of  greenbacks  had  been 
retired  ? 

No  one  can  fail  to  be  anxious  as  to  the  decision  which 
will  be  made  at  the  next  Presidential  election  in  regard 
to  this  most  important  question.  There  are  many  who 
will  regard  the  election  of  Governor  Allen  as  a  very  de- 
cided indication  that  the  people  in  the  West  are  in  favor 
of  an  increase  of  what  is  called  lawful  money,  if  not  of 
ultimate  repudiation;  I  think  otherwise.  Thousands 
of  hard-money  Democrats  will  vote  for  him  while  they 
spit  upon  the  currency  plank  in  the  platform.  A  few, 
perhaps  many,  like  Mr.  Groesbeck,  will  stay  at  home  or 
vote  for  his  opponent,  but  the  mass  will  vote  the  party 
ticket.  His  election,  if  he  is  elected,  may  be  claimed 
as  a  triumph  of  the  inflationists,  but  it  will  not  be.  If 
it  should  be,  in  fact,  such  a  triumph,  victory  to  the  party 
would  be  worse  for  it  than  defeat.  No  party  can  turn 
its  back  upon  its  time-honored  principles  and  ignore  the 
teachings  of  its  former  great  leaders  without  loss  of  rep- 
utation and  of  strength.  The  election  in  Ohio  may  be 
significant,  but  it  will  not  affect  the  Presidential  election 
of  next  year.  That  election  will,  undoubtedly,  be  one 
of  the  most  important  ones  that  has  ever  occurred,  and 
it  is  to  be  hoped  that  the  result  will  be  the  election  of 
the  man  who  stands  upon  the  soundest  platform.  Ralph 
Waldo  Emerson,  some  years  ago,  sententiously  re- 
marked that  "the  Whigs  had  the  best  men  and  the 
Democrats  the  best  principles. ' '  It  will  be  a  happy  thing 
for  the  United  States  if  not  only  the  party  with  the  best 
principles,  but  with  the  best  men,  comes  into  power. 
That  the  general  sentiment  is  sound  upon  the  financial 
question  was  indicated  by  the  favor  with  which  the  veto 
of  the  currency  bill  by  President  Grant  was  received  by 
intelligent  men  of  all  parties.  It  is  a  comfort  to  know 
that  during  his  term  of  office  there  will  be,  at  least,  no 
further  expansion.  In  the  meantime  the  sober  thought 
of  the  people  will  have  time  to  assert  itself. 

London,  September  11,  187s - 


178 


Sixteenth  Letter. 
To  tlic  Editor  of  The  Tribune : 

Sir:  Mr.  Phillips'  letter  to  the  Legal  Tender  Club 
may  be  fine  rhetoric,  but  it  would  be  difficult  to  find  in 
the  same  compass  so  many  transparent  fallacies  and 
erroneous  statements.  It  is  true  that  "throughout 
Christendom"  paper  is  made,  to  a  large  extent,  a  sub- 
stitute for  coin,  but  it  never  does  its  work  well  except 
when  it  is  the  equivalent  to  coin.  It  is  only  when  paper 
money  becomes  depreciated  and  drives  specie  out  of 
circulation  that  it  becomes  mischievous.  As  long  as  it 
has  the  purchasing  power  of  coin  it  is  a  healthful  and 
convenient  substitute  for  it.  When  it  has  not  this  power 
it  fails  to  perform  its  proper  office.  Nor  does  it,  Avhen 
it  is  the  equivalent  to  coin,  absolutely  take  its  place. 
It  merely  shares  the  field  with  coin,  and  by  increasing 
the  volume  of  currency  gives  stimulus  to  enterprise, 
encouragement  to  industry,  and  assistance,  by  facilitat- 
ing credit,  to  men  of  moderate  means  in  competing  with 
capitalists.  In  Great  Britain,  in  Germany,  in  France, 
in  Holland,  and  other  prosperous  European  States,  there 
is  more  coin  in  circulation  and  in  the  banks  than  out- 
standing bank-notes.  It  is  not  so  in  Italy,  because  there 
a  currency  (which,  by  the  wa}-,  is  not  half  so  depre- 
ciated as  our  legal-tender  notes)  drives  specie  away,  as 
it  does  in  the  United  States.  But  even  Italy,  notwith- 
standing the  expensiveness  of  her  large  standing  army, 
is  moving  in  the  right  direction,  and  the  indications  are 
that  within  a  brief  period  she  also  will  have  a  bank- 
note currency  equal  to  coin.  Mr.  Phillips  says  that 
political  economy  "settles  few  points;"  that  it  is  "ex- 
perience which  decides  questions,  and  that  business 
experience  has  decided  that  currency  in  civilized  and 
commercial  nations  must  rest  upon  credit  and  consist  of 
paper."  With  all  proper  deference  to  such  high  author- 
ity, I  venture  to  assert  that  the  experience  of  civilized 
and  commercial  nations  has  decided  no  such  thing; 
that,  on  the  contrary,  it  has  decided  that  currency 
should  rest  upon  coin,  and  that  no  currency  which  is 
not  the  equivalent  of  coin,  or,  in  other  words,  which 
has  not  the  purchasing  power  of  coin,  should  be  toler^ 


179 

ated.  For  proof  of  the  correctness  of  this  assertion, 
I  point  to  the  present  condition  of  all  the  leading  com- 
mercial States  of  Europe. 

Mr.  Phillips  also  contends  that  specie  cannot  be  a 
proper  basis  for  currency,  because  there  is  not  enough 
of  it  held  by  the  banks  to  redeem  their  circulating 
notes,  and  he  illustrates  this  point  by  comparing  John 
Bull  to  the  six-bottle  toper  who  refrained  from  drinking 
the  wine  he  so  dearly  loved  in  order  that  he  might  en- 
joy the  delightful  fragrance  of  the  strawberry  at  the 
bottom  of  the  glass.  Mr.  Phillips  has  doubtless  been  a 
close  observer  of  the  habits  of  topers,  and  of  their 
power  of  controlling  their  appetites,  but  he  certainly 
presents  them  in  a  different  light  from  that  in  which 
most  men  have  been  in  the  habit  of  regarding  them.  A 
toper  who  could  sit  "  a  whole  evening"  with  the  tempt- 
ing liquid  un tasted  before  him,  in  order  that  he  might 
enjoy  the  delicious  odor,  not  of  the  wine,  but  of  the 
''small  bit  of  strawberry  "  which  it  covered,  would  be 
worth  going  to  see.  What  a  subject  for  a  "  Hogarth  " 
would  such  a  toper  have  been  ! 

' '  The  vast  system  of  British  paper ' '  which  Mr.  Phillips 
speaks  of  is  not  one-half  of  the  amount  of  the  paper  money 
in  circulation  in  the  United  States.  There  is,  as  I  have 
said,  coin  enough,  and  more  than  enough,  in  Great 
Britain  to  redeem  every  dollar  of  paper  money  there  is 
in  circulation  within  her  boundaries.  It  is  not,  it  is 
true,  all  held  by  the  banks,  but  enough  is  held  by  them 
to  enable  them  to  meet  promptly  all  calls  that  are 
likely  to  be  made  upon  them,  and  bank-notes  have  every- 
where in  Great  Britain  the  purchasing  power  of  (^oin. 
To  require  banks  to  keep  constantly  in  their  vaults 
specie  enough  to  redeem  their  notes  would  defeat  the 
main  object  for  which  banks  of  issue  have  been  created. 
A  large  portion  of  convertible  bank-notes  in  all  com- 
mercial countries  is  so  much  needed  for  actual  and  daily 
use  that  there  is  never  danger  of  its  being  presented 
for  redemption.  The  banks  of  the  United  States  have 
undoubtedly  held  too  little  specie  in  proportion  to  their 
circulation,  but  in  all  the  panics  that  have  occurred  (and 
panics  will  occur  in  all  enterprising  and  commercial  na- 
tions) it  is  their  depositors  and  not  the  note  holders  that 


180 


have  compelled  them  to  shut  their  doors.  As  I  have 
before  said,  banks  of  issue  exist  in  all  commercial  coun- 
tries. They  have  existed  in  the  United  States  from  the 
foundation  of  the  Government,  and  they  will  exist,  in 
some  form,  to  the  end  of  it.  Badly  as  they  have  been 
heretofore  managed,  the  country  has  advanced  in  wealth 
and  population  in  a  manner  of  which  we  may  be  justly 
proud.  Our  national  banking  system  requires  w^hat  is 
required  by  no  other  banking  systems  in  the  world — and 
in  this  consists  its  superiority — that  every  dollar  of  bank- 
notes in  circulation  shall  be  secured  by  more  than  its 
equivalent  in  value.  Can  there  be  a  better  circulating 
medium  than  this  ? 

THE  IvESSOX   OF   EXPERIENCE. 

Mr.  Phillips  states  that  "  in  building  a  house  we  do 
not  put  a  platform  between  the  house  and  the  founda- 
tion," neither  do  we  make  the  foundation  the  house. 
Bank-notes  which  are  furnished  by  the  Government  to 
the  banks  in  exchange  for  United  States  bonds,  which 
are  worth  a  premium  in  gold,  would  seem  to  rest  upon 
the  solid  foundation  that  Mr.  Phillips  speaks  of.  The 
statement  that  the  banks  stand  between  the  Govern- 
ment and  the  people  at  a  cost  of  ;^2o, 000,000  a  year  to 
the  latter  is  an  exaggeration.  The  interest  which  the 
banks  receive  on  the  bonds  which  they  are  compelled 
to  deposit  with  the  Treasurer  is  overstated,  and  no  de- 
duction is  made  for  the  taxes  to  which  the  banks  are 
subjected;  but  if  the  banks  were  the  gainers  to  the  ex- 
tent named,  would  that  be  sufficient  reason  either  for 
returning  to  the  old  State  bank  system  (which  banks  of 
the  wildcat  nature  would  not  object  to)  or  for  keeping 
up  direct  issues  by  the  Government  of  a  depreciated 
currency,  in  comparison  with  the  evils  resulting  from 
which,  according  to  high  authority,  "ordinary  tyranny, 
oppression,  and  excessive  taxation  bear  lightly  ?  "  Mr. 
Phillips  has  not,  I  apprehend,  made  finance  a  special 
study,  but,  being  thoroughly  versed  in  history,  he  can 
doubtless  inform  those  whom  he  nia}^  address,  or  the 
clubs  to  which  he  ma}-  hereafter  write  letters,  what 
country  has  tried  the    experiment   of  direct  issues  of 


181 

notes  without  damaging  consequences.  The  exper*- 
iment  was  tried  on  our  side  in  Continental  times, 
and  more  recently  by  the  Confederates.  France  tried 
it  with  assignats  and  mandats — with  what  success 
history  informs  us.  Will  Mr.  Phillips  or  some  brother 
inflationist  name  the  country  in  which  the  experi- 
ment has  worked  w^ell?  England  sees  no  merit  in 
it;  France  seems  to  regard  one  trial  sufficient;  United 
Germany  is  now  revising  her  financial  system,  and  yet 
Bismarck,  to  whom  the  world  attributes  great  sagacity 
and  abilit}^  with  our  example  before  him,  does  not 
"take  to  it."  What  a  short-sighted  man  he  must  be  to 
regard  banks  as  a  proper  intermediary  for  furnishing  a 
proper  circulation  to  the  Germans,  thus  putting  "a 
platform  between  the  Government  and  the  house"  he  is 
erecting.  How  wilfully  blind  not  to  adopt  a  system 
which  is  working  so  charmingly  in  the  United  States. 
Poor,  benighted  Bismarck  !  Prayers  that  his  eyes  may 
be  opened  to  a  saving  knowledge  of  the  truth,  as  con- 
tained in  our  Legal-Tender  Acts,  should  go  up  from 
every  legal-tender  club  and  wigwam  throughout  the 
land. 

But  does  not  Mr.  Phillips  give  rather  a  free  rein  to  his 
imagination  in  saying  that  "England  never  knew  more 
prosperous  years  than  from  1800  to  1820?"  For  most 
of  these  years  England  was  engaged  in  an  exhausting 
war,  contending  against  the  greatest  captain  that  the 
world  has  ever  produced,  and,  at  times,  against  a  com- 
bination of  all  Continental  States  which  he  had  either 
subdued  or  compelled  to  assist  in  his  efforts  to  bring 
into  subjection  this  little  sea-girt  island.  W^as  this  the 
period  of  England's  great  prosperity?  This  certainly 
will  be  news  to  Englishmen.  If  it  was  so,  how  unwise 
were  her  statesmen  in  not  liberating  Napoleon,  and  thus 
enabling  him  to  continue  a  war  which,  in  connection 
with  an  irredeemable  currency,  had  made  the  nation  so 
prosperous.  During  that  tremendous  and  protracted 
struggle  certain  branches  of  industry  in  England  did 
flourish.  The  demand  for  ships  and  war  materials  did 
unquestionably  stimulate  various  kinds  of  manufactur- 
ing, and  give  the  appearance  of  prosperity  to  many 
parts  of  the  kingdom;  but  there  was  never  a  period  in 


182 


English  history  when  the  English  people  were  so  op- 
pressed by  taxation  or  driven  to  such  straits  to  keep 
body  and  soul  together  as  they  were  between  1800  and 
1820.  Threatened  with  invasion,  with  all  Europe  at 
times  united  against  her,  rolling  up  an  immense  debt, 
compelled  to  send  her  specie  abroad  for  the  support  of 
her  arm3%  and  to  meet  the  subsidies  which  w^ere  due  to 
auxiliary  troops,  it  is  her  glory  that  she  protracted  the 
struggle  as  she  did  until  the  peace  of  Europe  was  re- 
stored, b}^  the  complete  overthrow  of  Napoleon  on  the 
memorable  field  of  Waterloo.  That  she  was  thus  ena- 
bled to  contend  for  so  many  years  wdth  the  formidable 
power  that  was  arrayed  against  her  was  owing,  in  addi- 
tion to  her  bull-dog  persistency  and  pluck,  to  tw^o  causes — 
she  w^as  mistress  of  the  seas,  and  may  be  said  to  have 
had  a  monopoly  of  manufacturing.  No  interdicts  of  Na- 
poleon could  prevent  her  from  trading  wnth  America,  or 
even  with  the  continent,  and  she  had  no  competitor  in 
the  manufacture  of  goods  wdiich  other  nations  stood  in 
need  of;  but  for  this  she  must  have  succumbed  to  Napo- 
leon. England,  if  not  the  inventor  of  the  steam  engine, 
was  the  first  nation  to  put  it  into  practical  use.  For 
3^ears  she  was  the  only  nation  that  profited  b}^  the  use 
of  it.  It  may  not  be  too  much  to  say  that  England  was 
saved  in  the  Napoleonic  war  b}'  the  steam  engine,  and 
that  to  steam  power,  which  has  enabled  her  cheaply  to 
utilize  her  vast  supply  of  iron  and  coal,  is  her  great 
prosperity  mainly  attributable.  England  survived  the 
war  and  came  out  of  it,  although  greatly  impoverished, 
still  strong  in  comparison  with  the  Continental  States; 
but  the  assertion  that  the  war  period  was  a  period  of 
prosperity  is  a  falsification  of  history,  and  absurd  upon 
its  face.  The  period  of  England's  prosperity  has  been 
since  the  effects  of  the  crisis  of  1825  were  overcome, 
which  crisis  occurred  long  after  the  specie  payments  had 
been  resumed.  Since  that  time  the  imports  and  exports 
of  the  United  Kingdom  have  increased  from  less  than 
100,000,000  pounds  to  nearlj^  700,000,000  pounds  ster- 
ling. Can  there  be  any  stronger  proof  than  this  of  the 
prosperity  of  this  country  after  specie  payments  had 
been  restored  ?  England  reallj'  commenced  her  rapid 
march  of  material   progress  about  the  year  1830,  since 


183 

which  time  her  advancement  in  wealth  and  power  has 
been  without  a  precedent  in  the  histor}^  of  nations.  If 
it  be  true,  as  Mr.  Phillips  states,  that  the  United  States 
''entered  the  valle}-  of  the  shadow  of  death"  in  1865, 
when  Mr.  McCulloch  began  contraction,  is  it  not  strange 
that  prices  should  have  advanced,  and  that  the  country 
should  have  been  so  seemingly  prosperous,  after  we  had 
begun  to  enter  that  dark  valley  ?  How  any  man  can  at- 
tribute the  crisis  of  1873  and  the  depression  since  that 
to  the  withdrawal  of  $44,000,000  in  1867,  which  with- 
drawal has  been  more  than  made  up  by  the  increase  of 
bank-note  circulation,  can  only  be  explained  b}^  the  fact 
that  to  a  genuine  inflationist  facts  have  no  meaning  and 
falsehood  seems  to  be  truth. 

NON-EXPORTABI.E    MONKY. 

We  certainly  have  a  non-exportable  currency  now,  and, 
therefore,  possess  what  Mr.  Care}-  favors.  If  it  were  in- 
creased to  the  amount  that  many  desire,  it  would  cer- 
tainly be  non-exportable,  as  it  would  not  be  worth  the 
cost  of  transporting  it  across  the  ocean  or  the  Canada 
line.  If  we  are  to  have  a  non-exportable  coinage  under 
inflation  rule,  we  must  be  careful  not  to  put  a  particle  of 
silver  or  gold  in  it,  otherwise  it  will  certainly  leave  us. 
Some  years  ago  Congress,  for  the  purpose  of  keeping 
change  in  the  country,  alloyed  the  silver  coinage  so  that 
a  dollar  was  worth  only  ninety-three  cents,  and  made  it 
a  legal  tender  for  $5.  This  coinage,  of  course,  remained 
at  home  until  "the  best  currency  which  the  world  has 
ever  seen"  made  its  appearance,  when  it  also  took  wings 
and  flew  to  foreign  parts,  so  that  a  piece  of  it  would  have 
been  a  curiosit}-.  A  non-exportable  coinage  would,  in 
one  respect  at  least,  be  a  benefit  to  the  country.  It 
would  save  the  expense  of  keeping  up  the  mints.  Our 
precious  metals  would  leave  us,  in  the  form  of  bullion, 
which  would  be  less  expense  to  us  and  more  acceptable 
to  foreigners.  Even  now,  as  gold  and  silver  are  not  a 
currency,  but  merely  a  commodity,  the  maintenance  of 
the  mints  may  be  regarded  as  a  useless  expense.  Mr. 
Kelley,  to  be  consistent,  should,  at  the  next  session  of 
Congress,  introduce  a  bill  to  close  the  mints,  and  to  pro- 


184 

liibit  Mr.  Bristow  from  purchasing  silver.  According  to 
his  notions,  there  is  not  and  ought  not  to  be  the  slight- 
est use  for  mints,  and  they  are  a  considerable  burden 
upon  tax-payers.  I  respectfully  suggest,  therefore, 
that  he  introduce  such  a  bill  and  make  it  a  test  ques- 
tion. 

THE   DETROIT   CONVENTION. 

Upon  reading  the  resolutions  adopted  by  the  Detroit 
Convention,  I  find  that  I  was  mistaken  in  regard  to  the 
proposed  issue  of  the  convertible  3.65  bonds.  I  had 
supposed  that  the  present  volume  of  legal  tenders  only 
was  to  be  maintained  by  the  use  of  these  bonds.  The 
advocates  of  an  exclusive  paper  currency  have  greater 
ambition  than  I  had  given  them  credit  for.  They  cer- 
tainly do  not  intend,  if  we  may  judge  by  the  resolutions 
referred  to,  that  any  "pent-up  Utica  shall  confine  their 
powers"  for  doing  good.  They  are  not  only  coura- 
geous, but  they  are  consistent.  If  the  legal-tender  notes 
are,  as  has  been  asserted,  the  best  currenc}^  the  world 
has  ever  had  or  can  have,  wh}'  should  the  issue  of  them 
be  limited  ?  Can  there  be  too  much  of  a  good  thing  ? 
The  framers  of  these  resolutions  are  not  onl}-  coura- 
geous and  consistent,  but  they  are  humorous  also.  No 
one  but  a  man  of  ' '  infinite  humor  ' '  could  have  drawn 
the  second  and  fifth  resolutions — the  latter  favoring  an 
issue  of  convertible  bonds  interchangeable  with  green- 
backs to  an  amount  equal  to  the  whole  Government 
debt,  and  the  former  asserting  the  obligation  of  the  Gov- 
ernment to  ' '  furnish  the  people  with  an  absolutely  safe 
and  uniform  currenc}',  adapted  in  amount  to  their  vary- 
ing needs,  and  of  a  value  not  materially  differing  from 
that  of  other  civilized  nations."  The  convention,  how- 
ever, is  certainly  chargeable  with  one  important  omis- 
sion— it  failed  to  tell  us  for  what  these  convertible  bonds 
are  to  be  issued.  We  have  been  told,  in  song  at  least, 
that  "  Uncle  Sam  is  rich  enough  to  give  us  all  a  farm." 
Are  we  to  understand  that  he  is  rich  enough  to  give  to 
each  of  us  these  obligations,  according  to  our  varying 
necessities  ?  As  the  convention  probably  did  not  con- 
sider the  5.20's  and  1881's  as  being  a  portion  of  the  debt 
which  has  been  made   "especially  payable  in  coin,"   it 


185 


is  easy  to  understand  how  the  3.65's  can  be  issued  to 
the  amount  which  the}'  represent,  but  as  the  bonds, 
which  are  not  upon  their  face  pa}' able  in  coin,  are 
scarcely  equal  in  amount  to  one-half  of  the  proposed 
issue,  the  convention  was  certainly  guilty  of  great  neg- 
lect in  not  informing  us  for  what  purpose  and  by  what 
means  the  remaining  "convertibles"  are  to  find  their 
way  into  the  pockets  of  the  people.  The  convention, 
in  doing  its  work  thoroughly,  ought  to  have  enlightened 
us  on  this  point.  If  these  convertible  bonds  are  to  be 
given  to  us  gratis,  as  used  to  be  the  saying  in  the  WcvSt, 
"free,  gratis,  for  nothing,"  we  ought  to  know  it  in  ad- 
vance, so  that  we  ma}'  not  be  taken  by  surprise  by  the 
munificence  of  a  generous  Government.  Perhaps,  how- 
ever, we  are  not  to  be  surprised  exactly  in  this  way,  but 
in  another  equally  delightful.  Perhaps  we  are  to  be 
relieved  from  taxation  by  the  use  of  these  convertible 
bonds.  It  may  be  that  the  Excise  Laws  are  to  be  re- 
pealed and  that  after  the  bonds  "  not  especially  made 
payable  in  coin ' '  are  called  in  and  paid  off  with  the 
"convertibles,"  the  surplus  is  to  be  used  in  defraying 
the  current  expenses  of  the  Government.  It  would  be  '  'a 
sin  and  a  shame' '  not  to  give  us  at  least  free  whiske}^  with 
so  much  free  money  as  we  are  to  have.  Then,  too,  it  is 
possible  that  frequent  and  liberal  "eye-openers,"  as  they 
are  called  in  California,  may  be  needed  in  order  that  we 
may  take  in  the  full  beauties  of  the  glorious  system.  With 
cheap  money  we  ought  certainly  to  have  cheap  whiskey. 

The  proceedings  of  a  mass  convention  numbering  500 
souls  ought,  however,  to  be  treated  seriously,  and  I 
confess  to  a  feeling  of  relief  upon  reading  its  resolu- 
tions. They  mean  nothing  if  they  do  not  mean  bound- 
less expansion,  violation  of  the  national  faith,  and  ulti- 
mate repudiation.  The  Prince  of  Darkness  is  never 
dangerous  when  he  appears  with  the  cloven  feet  and 
conspicuous  tail;  it  is  only  when  he  comes  with  specious 
promises  and  captivating  appearance  that  he  leads  poor 
mortals  astray.  By  these  resolutions  the  convention 
threw  off  all  disguises,  and  I  greatly  overestimate  the 
intelligence  and  the  probity  of  ni}^  countrymen  if,  by  so 
doing,  it  has  not  deprived  the  inflationists  of  much  of 
their  power  for  mischief. 

London,  September  ji ,  iSjj. 


SPEECH 

DELIVERED   AT  THE 

ONE    HUNDRED    AND    NINTH    ANNIVERSARY 
BANQUET  AT  DELMONICO'S, 

May  14,   1877. 


SPEECH 

DElvIVERKD  AT  THE 

ONE    HUNDRED    AND    NINTH    ANNIVERSARY 
BANQUET  AT  DEEMONICO'S, 

May  14,   1877. 


The  President.  The  eighth  regular  toast  is  "Re 
sumption  of  Specie  Payments,"  a  thing  long  deferred, 
but  earnestly  hoped  for.  This  will  be  responded  to  by 
Hon.  Hugh  McCuUoch,  former  Secretary  of  the  Treas- 
ury. 

SPEECH    OF    MR.    m'CUELOCH. 

Mr.  President  and  Genteemen  of  the  Chamber 
OF  Commerce:  You  have  made  a  mistake,  Mr.  Presi- 
dent, in  calling  upon  me  to  respond  to  the  toast  "Re- 
sumption of  Specie  Payments."  I  am  not  gifted  with 
the  "oral,"  and  I  long  since  exhausted  m}^  limited  re- 
sources in  discussing  the  currency  question.  In  the  few 
remarks  I  shall  make  I  can  only  repeat  what  I  have  said 
in  official  reports  and  in  letters  which  have  appeared  in 
the  newspapers. 

At  the  close  of  the  late  civil  war  the  nation  was  con- 
fronted with  an  immense  debt — some  four  hundred  mil- 
lions of  which  consisted  of  circulating  notes,  possessing, 
unfortunately,  all  the  legal  attributes  of  money — which 
was  to  be  dealt  with  by  the  Treasury  Department  under 
the  direction  of  Congress.  It  so  happened  that  I  was  at  the 
time  at  the  head  of  that  department,  and  it  consequently 
became  my  duty  to  make  suggestions  to  Congress  as  to  the 
course  that  should  be  pursued  in  the  treatment  of  a  sub- 
ject of  so  transcendent  importance.     This  I  did  in  official 


190 


reports  and  in  personal  interviews  with  members,  with 
all  the  earnestness  I  felt  and  the  ability  I  possessed.  I 
was  less  anxious  about  the  interest-bearing  debt  than 
about  the  currency,  but  I  w^as  sometimes  appalled  by 
its  magnitude.  Three  thousand  millions  of  dollars 
against  a  nation  that  a  few  years  before  was  uneasy  un- 
der a  debt  of  a  hundred  millions  was  aformidable  fact  to 
contemplate.  I  confess  that  I  was  frequently  staggered 
by  it.  I  was  apprehensive  that  the  right  start  might 
not  be  made:  apprehensive  that  our  people  might  be 
disposed  to  imitate  the  example  of  those  nations  in 
which  national  debts  are  an  abiding  and  constanth^  in- 
creasing burden;  apprehensive  that  the  tax-payers 
might  be  unwilling  to  impose  upon  themselves  the 
taxes  necessary  for  the  payment  of  the  interest  upon  so 
enormous  a  debt,  to  say  nothing  about  the  gradual  ex- 
tinguishment of  the  principal.  These  apprehensions 
w^ere  soon  dissipated.  In  the  very  year  in  which  the 
war  was  closed  the  reduction  of  the  debt  was  com- 
menced, and  the  reduction  has  been  steadily  continued, 
to  the  amazement  of  foreign  nations  and  to  the  honor  of 
the  American  people.      [Applause.] 

There  is  one  fact  in  regard  to  the  published  statements 
of  the  public  debt  to  which  I  may,  I  trust,  be  pardoned 
for  referring.  If  you  think  it  improper  for  me  to  do  so, 
please  attribute  the  impropriety  to  the  wine  which  the 
gentlemen  around  me  have  been  drinking.  [Laughter.] 
In  none  of  the  Treasury  statements  which  I  have  seen 
since  the  advent  of  the  last  administration  has  any  mem- 
tion  been  made  of  the  reduction  of  the  debt  under  the 
previous  one.  A  person  looking  at  one  of  these  state- 
ments would  suppose  that  the  reduction  of  the  debt  was 
commenced  with  General  Grant's  administration,  while, 
in  fact,  the  previous  reduction  had  been  upwards  of  two 
hundred  and  fifty  millions  of  dollars,  according  to  the 
books  and  published  statements  of  the  Treasury,  and 
while  also  a  larger  sum  even  than  this  was  paid  by  the 
War  and  Navy  Departments  on  accounts  which  had 
not  been  so  adjusted,  as  to  appear  as  a  part  of  the  public 
debt  on  the  Treasury  books.  You,  doubtless,  recollect 
the  anecdote  of  the  witness  who,  upon  being  rebuked 
by  the  judge  for  stating  his  age  to  be  much  less  than  it 


191 


was,  excused  himself  by  sa3ang  that  twenty  3'ears  of  his 
life  had  been  spent  on  the  eastern  shore  of  Maryland, 
which  it  would  be  a  cruel  thing  to  charge  to  his  ac- 
count. There  were  people  a  few  years  ago  who  seemed 
to  think  that  the  four  years  of  Mr.  Johnson's  adminis- 
tration ought  not  to  be  charged  against  the  life  of  this 
great  nation,  and  yet  I  predict  that  when  the  history  of 
that  administration  shall  have  been  written  by  an  im- 
partial pen,  there  will  be  nothing  upon  its  pages  of  which 
the  friends  or  descendants  of  those  who  participated  in 
it  will  be  ashamed.  [Applause.]  I  have  alluded  to 
this  matter  merely  because  injustice  has  been  done  to 
the  Government  by  these  partial  statements  of  the  re- 
duction of  the  public  debt. 

While  the  general  management  of  the  debt  has  been 
such  as  to  command  the  approval  of  the  people,  there  is 
one  great  error  into  which  we  have  fallen.  We  have  been 
reducing  the  interest-bearing  debt,  leaving  the  legal- 
tender  notes  substantially  untouched.  During  the  war 
a  ver}^  large  amount  of  money  was  required  for  the  pay- 
ment of  the  soldiers  and  sailors  and  other  large  ex- 
penses, for  which  there  was  no  legitimate  use  after  the 
war  was  over.  Everybody  knew,  or  at  least  everybody 
ought  to  have  known,  that  the  country,  while  engaged 
in  this  tremendous  contest,  was  far  from  being  in  a 
prosperous  condition.  Everybod}^  knew,  or  ought  to 
have  known,  that  the  requirements  of  trade  could  not 
be  larger  at  the  close  of  the  war  than  they  were  at  its 
commencement;  and  yet  the  volume  of  paper  in  circu- 
lation as  money  was  some  four  times  larger  in  1865  than 
it  was  in  1661.  It  was  very  clear  to  my  mind  that  this 
surplus  currenc\^  must  be  reduced,  or  it  would  inevit- 
ably produce  mischief.  Congress,  and  perhaps  a  ma- 
jority of  the  people,  thought  otherwise.  The  process 
of  contraction  was  stopped  before  it  had  been  fairly 
tried — before  it  had  effected  in  the  slightest  degree  the 
business  of  the  country;  and  the  result  has  been  mani- 
fested in  the  terrible  collapse  which  has  taken  place 
everywhere  in  the  value  of  property,  in  enterprise,  in 
the  enormous  municipal  and  individual  indebtedness 
under  which  tax-pa3'ers  and  debtors  are  groaning,  in  the 
demoralization  which  has  been  so  general,  that  I  might 


192 


almo.st  vSay  that  fidelity  in  public  trusts  and  integrity  in 
the  discharge  of  official  duty  hav^e  been  the  exception 
rather  than  the  rule.  In  my  opinion,  the  legal-tender 
currency  can  be  justly  charged  with  more  of  the  evil 
which  has  befallen  the  country  than  anything  else  that 
can  be  named.  [Applause.]  A  redundant  currency  has 
been  the  chief  cause  of  our  troubles,  and  this  currency 
must  be  reduced  to  the  requirements  of  legitimate  trade, 
in  all  its  various  branches,  before  prosperity  will  return 
or  the  specie  standard  will  be  restored.  Humiliating  as 
it  may  be,  we  must  return  to  the  policy  which  was 
abandoned  in  1868.  There  can  be  no  doubt  that  there 
is  more  paper  money  in  the  country  than  there  is  a 
proper  use  for.  The  banks  in  this  great  commercial  city 
find  it  difficult  to  use,  even  at  very  low  rates  of  interest, 
the  currency  with  which  they  are  burdened,  and  some  of 
them  find  their  best  customers  among  that  enterprising 
class  who  are  developing  the  resources  of  the  country 
by  bulling  and  bearing  stocks.  [Laughter.]  The  vari- 
ous insurance  and  trust  companies  of  the  Eastern  States, 
finding  it  impossible  to  loan  their  money  at  satisfactory 
rates  at  home,  are  employing  agents  to  lend  it,  at  high 
rates,  in  the  Western  States.  The  old  rule  has  been  re- 
versed— lenders  are  soliciting  borrowers  instead  of  bor- 
rowers soliciting  lenders.  In  a  recent  visit  to  the  West 
I  learned  in  all  the  towns  through  which  I  passed  that 
there  were  agents  employed  by  Eastern  companies  to 
lend  money  on  bond  and  mortgage.  In  a  majority  of 
cases,  I  apprehend,  these  loans  will  be  disastrous  to  the 
borrowers,  and  in  not  a  few  unprofitable  to  the  lenders. 
I  never  hear  of  persons  attempting  to  obtain  very  high 
rates  of  interest  without  calling  to  mind  an  incident  of 
my  early  life.  I  had  an  old  friend  in  Boston,  Mr.  Paul 
Peter  Francis  DeGrand,  whom  I  esteemed  most  highly 
for  his  extensive  commercial  knowledge,  and  regarded, 
perhaps,  with  greater  interest  by  the  fact  that  he  had 
fought  a  duel  and  carried  the  evidence  of  his  vindicated 
honor  in  a  shattered  arm.  In  taking  leave  of  him,  as  I 
was  about  to  start  for  the  West,  I  asked  him  if  he  had 
any  advice  to  give  me.  "No,"  said  he,  "I  have  no  ad- 
vice to  give;"  then,  after  a  moment's  hesitation,  he  re- 
marked:    "Yes.  my  young  friend,  I  have   one  word  of 


198 

advice  to  offer.  I  have  been  in  that  new  country  myself. 
When  you  get  into  that  new  country  everybody  will 
want  to  borrow  your  money.  Now,  my  word  of  advice 
is  this:  If  two  men  come  to  borrow  your  money,  and  one 
offers  you  lo  per  cent,  and  the  other  offers  you  20  per 
cent.,  be  sure  to  lend  to  the  man  that  offers  you  10  per 
cent." 

Fortunately  for  the  country  our  President,  now  pres- 
ent, is  a  hard-money  man,  who  won  laurels  in  a  severe 
contest  with  inflationists  in  his  own  State.  Fortunately, 
also,  we  have  a  hard-money  man  at  the  head  of  the 
Treasury  Department,  who  has  made  finance  a  study, 
and  who  is  thoroughly  acquainted  with  the  condition  of 
the  country.  Under  their  lead  I  am  hopeful  that  the 
currency  question  will  be  solved  and  the  specie  standard 
restored,  to  the  great  relief  and  advantage  of  the  best  in- 
terests of  the  country.  This  can  be  done  within  the 
next  two  years  if  their  efforts  are  sustained  by  Congress 
and  the  intelligence  of  the  people.  The  influence  of 
this  chamber  of  commerce  should  be  exerted  in  this 
direction. 

One  word  more  upon  a  subject  to  which  the  distin- 
guished Secretary  of  State  has  alluded.  There  is  a  re- 
striction upon  our  foreign  commerce  which  ought  at 
once  to  be  removed.  Many  years  ago  a  law  was  passed 
for  the  encouragement  of  ship-building,  which  virtually 
prevented  citizens  of  the  United  States  from  purchasing 
foreign  ships.  Some  years  after,  such  duties  were  im- 
posed upon  materials  used  in  the  construction  of  ships  as 
to  make  ship-building  unprofitable.  So  that  it  has  been 
almost  literally  true  that  American  citizens  have  been 
prevented,  by  their  own  laws,  both  from  buying  or 
building  ships.  Legislation  more  unwise  can  hardly  be 
imagined.     [Applause.] 


ADDRESS 

DELIVERED   AT 

WOODSTOCK,  CONNECTICUT,  JULY  4,  1878, 


ADDRESS 

dewvErrd  at 
WOODSTOCK,  CONNECTICUT,  JUI^Y  4,  1S78. 


lyADiKS  AND  Gkntlemkn:  The  invitation  which  I 
received  to  participate  in  this  celebration  was  accom- 
panied by  a  request  that  I  should  say  something  about 
finance  and  business.  Recollecting  the  manner  in  which 
this  day  (which  must  always  be  honored  by  all  who  rev- 
erence the  character  and  appreciate  the  services  of  those 
by  whom  our  national  independence  was  achieved)  was 
observed  in  the  New  England  States  in  former  years — 
how  we  used  to  listen  to  orations  extolling  our  republi- 
can institutions,  our  inheritance  of  freedom — it  seemed 
something  like  desecration  to  devote  any  part  of  it  to 
the  discussion  of  subjects  so  practical  and  dry  as  those 
upon  which  I  was  invited  to  address  you.  This  depart- 
ure from  ancient  usages  does  not,  I  am  sure,  indicate 
an 3^  decline  in  patriotism,  but  rather  a  proper  apprecia- 
tion of  our  present  duties  and  responsibilities.  The 
events  of  the  last  seventeen  years — the  civil  war  which 
dwarfed  into  insignificance  the  Revolutionary  struggle; 
the  subsequent  delirium  under  the  influence  of  which 
we  looked  upon  lavish  expenditure  and  wild  speculation 
as  indications  of  real  prosperity;  the  awakening  to  a 
realisation  of  our  mistake  by  the  crisis  of  1873;  the  de- 
pression which  followed  and  which  still  exists,  have 
abated  the  exultation  with  which  we  were  wont  to  hail 
the  return  of  our  great  national  holiday  without  dimin- 
ishing our  respect  for  it. 

In  the  invitation  which  I  received  there  was  reference 
to  the  sacrifice  I  should  make  in  leaving  my  business 
to  come  to  Woodstock — as  if  I  were   to  be  the  loser  by 


198 


Exchanging  the  atmosphere  of  New  York  for  the  invig- 
orating air  of  the  hills  of  Connecticut;  as  if  one  born 
and  bred  in  New  P^ngland,  and  who,  with  the  exception 
of  three  short  visits,  has  been  away  for  nearly  half  a 
century,  could  be  making  a  sacrifice  in  returning  to  it 
and  meeting  an  assembly  like  this.  No  New  Knglander 
who  is  worthy  of  the  name  ever  ceases  to  be  proud  of 
the  land  of  his  birth  or  strongly  attached  to  it.  The 
forty-five  years  which  I  have  spent  either  in  the  valley 
of  the  Mississippi,  among  a  people  hardy  and  enterpris- 
ing, to  whom  I  am  strongly  attached;  in  Washington, 
which  everybody  abuses,  but  which  no  one  who  has 
lived  in  it  leaves  without  regret;  in  London,  the  world's 
commercial  metropolis,  the  richest  and  most  populous 
of  cities,  in  which  are  to  be  found  the  most  interesting 
treasures  of  ancient  and  modern  art,  and  the  clearest 
proofs  of  the  progress  of  mankind  in  civilization  and 
refinement,  have  in  no  wise  lessened  my  love  for  New 
England  nor  my  pride  in  being  one  of  its  sons.  I  am 
glad  to  be  here,  and  I  tender  to  the  gentleman  who  in- 
vited me  ni}'  sincere  thanks  for  the  invitation. 

And  here  let  me  say,  that  while  New  England  is  a 
good  country  to  be  born  in  and  a  delightful  country  to 
live  in,  it  is  not  well  for  those  who  make  it  their  home  to 
confine  themselves  to  its  l^orders.  There  is  such  a  thing 
as  too  strong  local  attachment.  There  is  such  beauty  in 
the  New  England  landscape,  such  vitality  in  the  New 
England  air,  such  culture  and  refinement  in  New  En- 
gland society,  such  comfort,  not  to  say  luxury,  in  New 
England  homes,  that  the  dwellers  in  this  favored  land 
(for  it  is  a  favored  land  in  spite  of  its  ungenerous  soil, 
its  rigorous  winters  and  March  winds)  are  in  danger  of 
being  indifferent  about  other  sections  and  of  underesti- 
mating their  influence  in  giving  direction  to  national 
affairs.  No  sensible  American  fails  to  be  benefited  by 
leaving,  for  a  time  at  least,  his  home,  no  matter  how 
great  its  advantages  and  allurements.  Frequent  visits 
to  other  sections  of  his  own  country  cannot  fail  to  im- 
prove him.  New  England  in  sending  out,  as  she  has 
done,  thousands  of  her  sons  to  possess  the  fertile  fields 
of  the  South  and  West,  and  to  take  the  lead  in  trade,  in 
banking,  the  professions   and  what  not  in  the  commer- 


l99 

cial  cities  which  they  have  done  so  much  to  build  and 
to  beautify,  has  made  large  contributions  to  the  national 
welfare.  New  Englanders  are  found  in  every  city  and 
township  in  the  Union,  so  that  they  have  earned  the 
title  of  the  "  universal  Yankee  nation;  "  but,  while  this 
is  the  case,  a  large  part  of  her  population  are  a  stay-at- 
home  people.  Half  the  people  of  New  England  have 
rarely  been  out  of  the  States  in  which  they  were  born. 
Large  numbers  of  her  well-to-do  and  well-educated  citi- 
zens shrink  from  even  the  contemplation  of  a  journey  to 
the  South  or  West,  and  think  that  they  have  "done 
wonders  "  if  they  have  made  an  occasional  visit  to  Bos- 
ton. And  permit  me  to  say,  with  all  due  respect  for 
their  acquirements  and  ability,  that  many  of  the  New 
England  representatives  in  Congress  would  be  wiser  and 
broader  men,  and  more  influential  in  the  national  coun- 
cils, if  they  came  more  frequently  into  personal  contact 
with  the  people  of  the  other  States.  Books  and  schools 
and  colleges  are  not  the  only  educators,  nor  is  learning 
necessarily  intelligence.  When  I  went  to  the  West  I 
met  men  there  whose  faces  had  never  been  seen  in  a 
school-house,  so  far-seeing,  so  sagacious  and  intelligent, 
so  superior  in  these  respects  to  myself,  that  I  was  almost 
ashamed  of  what  little  book  learning  I  had.  It  is  not 
paradoxical  to  say  that  we  can  learn  a  good  deal  from 
those  who  know  much. less  than  we  do. 

Pardon  me  for  following  this  line  of  thought  a  little 
further.  As  I  have  never  before  spoken  to  a  New  En- 
gland audience,  I  may,  like  the  man  who  thought  his 
prayer  should  be  listened  to  with  favor  because  he 
prayed  so  seldom,  draw  freely  upon  your  indulgence. 
There  is  nothing  more  instructive  to  an  American  than 
a  visit  to  foreign  countries.  Conceit  is  a  barrier  against 
knowledge.  The  less  one  has  of  it  the  more  open  is  he 
to  instruction,  and  there  is  nothing  which  takes  conceit 
out  of  a  man  like  a  residence  abroad.  They  only  are 
wise  in  their  own  conceit  who  know  little  of  others.  We 
live  in  a  country  so  extensive,  so  rich  in  minerals,  so 
varied  in  productions,  so  inexhaustible  in  resources,  so 
abounding  in  all  that  is  needful  for  the  support  of  the 
race;  and  then,  too,  we  are  so  inventive,  so  self-reliant, 
so  enterprising,  so  free,   that  a  good   many  of  us  seem 


200 


to  be  of  the  opinion  that  we  have  nothing  to  learn  from 
the  Old  World,  little  to  gain  by  intercourse  with  it,  and 
that  we  should  not  be  greatly  the  losers  if  it  were  sub- 
merged by  the  ocean.  Nothing  can  be  further  from  the 
truth.  We  are  as  dependent  upon  the  Old  World  as  the 
Old  World  is  upon  us.  We  have  much  to  learn  from 
European  nations — in  art,  in  politics,  in  finance,  in 
political  economy,  and  even  in  agriculture.  As  an  agri- 
cultural nation  we  certainly  ought  to  lead  all  others; 
and  yet  in  this  respect  we  are  excelled  by  nations  that 
are  frequently  spoken  of  as  effete.  We  impoverish  by 
bad  husbandry  soil  which  under  scientific  treatment 
would  year  by  year  be  increasing  in  productiveness.  To 
say  nothing  of  the  States  that  were  afflicted  with  slav- 
ery, there  are  States  in  the  valley  of  the  Mississippi, 
essentially  agricultural,  in  which  lands  are  being  so 
badly  treated  that  the  yield  per  acre  is  already  dimin- 
ishing. Our  lamented  friend,  Mr.  Greeley,  who  in- 
structed the  readers  of  the  Tribimc  by  telling  them 
what  he  knew  about  farming,  would  have  gained  in 
knowledge  by  visiting  even  Italy  or  Spain.  He  would 
have  seen  there  lands  responding  as  kindly  and  as  gen- 
erously to  the  labors  of  the  peasants  as  they  did  a  thou- 
sand years  before  the  discovery  of  America. 

Much  is  to  be  learned  from  European  nations  in  all 
the  live  subjects  of  the  day.  Look  for  a  moment  at 
Great  Britain,  with  which  we  have  more  important  com- 
mercial relations  and  more  intimate  social  relations  than 
with  any  other  country.  May  we  not  learn  something 
from  her  ?  Everybody  knows  that  she  is  the  richest  of 
nations;  that  her  colonies  encircle  the  globe;  that  Vic- 
toria is  the  acknowledged  queen  of  an  empire,  the 
grandest  in  the  world,  altogether  more  populous  and 
extensive  than  was  the  Roman  Empire  in  the  days  of 
the  Caesars;  and  yet  there  is  a  prevailing  sentiment  in 
the  United  States  that  Great  Britain  has  seen  her  best 
days;  that  her  institutions  are  repressive  and  anti- 
quated; that  she  lacks  the  vitality  and  energy  which 
are  so  characteristic  of  the  United  States.  The  very 
reverse  of  this  is  the  truth.  There  are  about  Great 
Britain  no  indications  of  decrepitude.  Age  has  not  im- 
paired her  vigor;  her  monarchy  is  not  the  antagonist  of 


201 

freedom;  every  3^ear  adds  to  her  population  and  largely 
to  her  wealth.  Her  Government,  although  stable  in 
its  general  character,  readily  adapts  itself  to  the  ad- 
vancing spirit  of  the  age.  Aristocratic  in  respect  to  the 
monarchy  and  the  peerage,  she  is  essentially  democratic 
in  respect  to  the  power  possessed  by  that  representative 
of  the  public  sentiment,  the  House  of  Commons,  to 
which,  in  all  great  contests,  the  House  of  Lords  is  com- 
pelled to  yield.  The  premier  is  virtually  the  head  of 
the  Government,  and  his  place  depends  upon  the  ac- 
cordance of  his  measures  with  the  popular  will.  In 
Great  Britain  no  man  can  be  a  cabinet  minister  who  is 
not  a  member  of  Parliament,  and  the  appointment  of  a 
member  of  the  House  of  Commons  to  a  seat  in  the  cab- 
inet involves  the  necessity  of  his  resigning  his  member- 
ship and  obtaining  the  endorsement  of  his  constituents 
in  a  new  election.  Judges  are  selected  from  those  who 
are  distinguished  alike  by  their  standing  as  lawyers  and 
their  stainless  reputation  for  uprightness.  Crime  is 
summarily  punished  and  breaches  of  trust  are  regarded 
as  among  the  most  heinous  of  crimes.  A  change  of 
ministry  makes  no  change  in  subordinate  offices.  Fidel- 
ity and  ability  are  the  tenure  of  office,  and  long  and 
faithful  services  are  rewarded  by  pensions.  Nor  does 
a  change  of  ministry  involve  a  change  in  financial  or 
economical  policy,  which  is  always  intended  to  be  so 
framed  as  to  depress  no  useful  industry,  check  no  lawful 
enterprise,  build  up  and  sustain  no  monopoly.  If  a  re- 
vision is  thought  to  be  necessary,  the  wisest  and  most 
practical  men  of  the  nation  are  consulted,  and  the  admin- 
istration stakes  its  continuance  upon  its  success  in  carry- 
ing through  Parliament  a  proposed  reform.  No  Ameri- 
can, no  matter  how  strong  his  republicanism,  can  be 
long  a  resident  in  Great  Britain  without  perceiving 
much  to  admire  in  the  character  and  working  of  the 
British  Constitution;  much  that  might  be  advanta- 
geously imitated  by  the  people  of  the  United  States.  Nor 
can  he  be  long  in  that  country  or  upon  the  continent 
without  perceiving  that  there  is  no  sluggishness  in  Eu- 
rope; that  there  is  progress  there  as  well  as  in  the 
United  States,  and  that  his  countrymen  must  make  good 
use  of  their  opportunities  if  they  are  not  willing  to  be 


202 

distanced  in  the  march  of  progress  and  civilization.  But 
I  must  hasten  to  the  subject  upon  which  I  was  invited 
to  address  you. 

How,  then,  is  the  business  outlook  and  what  are  the 
obstacles  in  the  wa}^  of  rapid  and  permanent  recover}- 
from  the  depression  which  has  so  long  existed  ?  While 
it  cannot  be  said  that  there  is  any  decided  improvement 
in  business,  there  is  a  better,  a  more  hopeful,  feeling 
among  business  men  and  among  the  people  generally 
than  has  existed  since  the  autumn  of  1873.  This  of  it- 
self is  a  healthy  indication.  There  have  been  within 
my  knowledge  several  severe  financial  crises  in  the 
United  States,  but  in  none  of  them  have  I  witnessed  more 
despondency  and  distrust  than  has  been  manifested 
within  the  last  five  years.  In  no  previous  financial 
crisis  were  bankruptcies  so  numerous,  individual  losses 
so  large.  None  has  been  comparable  with  it  in  the  dis- 
honesty which  it  has  developed,  the  mismanagement  and 
breaches  of  trust  which  it  has  brought  to  light.  Men 
holding  high  positions  in  society  and  in .  the  churches 
have  been  robbers;  corporations  supposed  to  be  sound, 
and  which,  according  to  the  reports  of  their  managers 
were  sound,  have  been  found  to  be  rotten  to  the  core; 
merchants  and  manufacturers  have  not  known  whom  to 
trust;  investors,  small  and  large,  where  to  look  except 
to  governments  for  solvent  securities;  laboring  men 
and  women,  who  put  their  faith  in  savings  institutions, 
have  been  in  almost  numberless  instances  cheated  out 
of  their  little  surplus  earnings — the  slow  accumulations 
of  years  of  toil  and  self-denial — and  for  a  time  it  seemed 
that  honor  and  fidelity  had  departed  from  among  us. 
For  all  this  there  was  cause.  Wliat  was  it?  Was  it  not 
our  wide  departure  from  old  financial  landmarks,  our 
disregard  of  our  own  experience  and  the  experience  of 
other  nations?  I  do  not  underrate  the  effects  of  our 
great  civil  war,  nor  the  effect  of  machinery  upon  labor 
which  is  felt  throughout  the  world,  and  which  presents 
questions  more  difficult  to  solve  than  any  economical 
questions  which  have  engaged  the  attention  of  thinkers 
or  statesmen,  to  which  I  shall  refer  further  on.  I  admit 
it  w^as  the  war  which  caused  the  first  movement  in  the 
wrong  direction,  but  the  war  is  not  answerable  for  what 


203 

followed  it.  The  enormous  expenditures  of  the  Gov- 
ernment made  money,  or  what  answered  the  purpose  of 
money,  plentiful,  and  the  demand  for  everything  neces- 
sary to  arm,  equip,  pay,  and  maintain  immense  armies — 
for  ships  and  for  war  materials — so  quickened  the  pro- 
ducing energies  of  the  loyal  States,  that  men  became  in- 
toxicated with  the  idea,  and  acted  upon  it,  that  the 
country  was  prosperous  when  it  was,  in  fact,  being  rap- 
idly impoverished.  All  this  is  admitted,  but,  according 
to  my  understanding,  most  of  the  evils  and  trouble  to 
which  I  have  referred  were  the  natural — I  ma}-  say  the 
inevitable — result,  not  of  the  war,  but  of  financial  mis- 
takes after  the  war  was  ended.  It  was  after  the  war 
that  the  flood-gates  of  speculation  were  thrown  wide 
open;  that  what  might  be  called  the  mania  for  building 
railroads  manifested  itself.  It  was  after  the  war  that 
municipal  indebtedness  began  to  roll  up,  and  became  at 
last  so  heavy  that  tax-payers  have  sought  relief  from 
their  burdens  by  attempting  to  repudiate  their  obliga- 
tions; that  the  private  debts  were  contracted  which  have 
since  been  wiped  oft'  by  bankruptcy.  It  required  no 
spirit  of  prophecy  to  predict  substantially  in  1865  what 
took  place  between  that  year  and  1873.  For  the  prose- 
cution of  the  war  a  very  large  amount  of  currency  was 
required,  for  which  there  was — there  could  be — no  le- 
gitimate use  after  this  requirement  ceased;  and  I  felt  it 
to  be  my  duty  as  Secretary  of  the  Treasury  to  ask  Con- 
gress in  my  first  report  for  authority  to  retire  so  much  of 
it  as  could  be  retired  without  prejudice  to  industrial  in- 
terests. The  authority  was  given — not  exactly  in  the 
form  that  I  desired — because  I  knew,  as  every  business 
man  knows,  that  there  are  seasons  of  the  year  when  full 
volumes  of  currency  are  required,  and  other  seasons 
when  large  amounts  are  idle  and  reductions  can  be 
made  without  prejudice  to  anybody,  but  authority  was 
given  to  me  to  withdraw  from  circulation  four  millions 
per  month.  The  power  thus  given  was  exercised  not 
to  the  full  extent,  but  to  the  extent  of  withdrawing  some 
$48,000,000  in  fourteen  months.  And  I  desire  to  say 
right  here,  that  no  business  interest  of  the  United  States 
suffered  while  this  withdrawal  was  going  on;  that  no- 
body but  the  officers  of  the  Treasury  would  have  known 


204 


that  it  was  going  on  had  it  not  been  for  the  publication 
of  the  monthl}^  Treasury  reports.  I  will  sa}^  more.  If  the 
law  authorizing  the  retirement  of  the  United  States  notes 
had  not  been  repealed,  and  the  authority  granted  to  the 
Secretary  of  the  Treasury  had  been  firmly  but  prudently 
exercised,  the  causes  which  produced  the  crisis  of  1873 
would  not  have  existed,  the  countrj^  would  have  escaped 
the  throes  and  agonies  of  the  last  five  years,  the  specie 
standard  would  have  been  restored,  and  a  greenback 
party  would  never  have  been  heard  of. 

The  withdrawal  of  the  legal-tender  notes  were  advo- 
cated because,  issued  for  war  purposes  only,  they  were 
not  needed  after  the  close  of  the  war,  inasmuch  as  the 
banking  institutions,  the  capitals  and  numbers  of  which 
were  steadih^  increasing,  could  and  would  furnish,  as 
they  had  done  before  the  war,  all  the  currency  that 
would  be  required  in  the  transaction  of  legitimate  busi- 
ness. The  experience  of  other  nations,  as  well  as  our 
own,  had  taught  that  the  inevitable  tendency  of  a  re- 
dundant currency  was  to  divert  capital  from  healthful 
channels  into  enterprises  prejudicial  to  material  inter- 
ests and  good  morals;  and  I  affirm  that  there  never 
have  been  severe  financial  troubles  in  the  United  States 
which  were  not  the  result  of  an  excess  of  money  of 
some  kind,  and  the  consequent  expansion  of  credit. 
So  well  was  this  understood,  even  when  the  wave  of 
speculation  was  rising,  that  I  did  but  echo  the  public 
sentiment  when  I  said  in  1865: 

Labor  is  the  great  source  of  national  wealth,  and  industry 
invariably  declines  on  an  inflated  currency.  The  value  of 
money  depends  upon  the  manner  in  which  it  is  used.  If  it  stim- 
ulates productive  industry,  it  is  a  benefit.  If,  on  the  other 
hand,  it  diminishes  industr}^  and  to  the  extent  to  which  it  di- 
minishes it,  it  is  an  evil.  Even  in  the  form  of  the  precious 
metals  it  may  not  prove  to  be  wealth  to  a  nation.  The  idea 
that  a  country  is  necessarily  rich  in  proportion  to  the  amount 
of  gold  or  silver  which  it  possesses  is  a  common  and  natural 
but  erroneous  one,  while  the  opinion  that  real  prosperity  is 
advanced  by  increase  of  paper  money  beyond  what  is  abso- 
lutely needed  as  a  medium  for  exchanges  of  real  values  is  so 
totally  fallacious  that  few  sane  men  entertain  it  whose  judg- 
ment is  not  clouded  by  the  peculiar  financial  atmosphere  which 
inflation  is  so  apt  to  produce.  *  *  -^  There  are  no  indica- 
tions of  real  and  permanent  prosperity  in  our  large  importa- 
tions of  foreign  fabrics,  in  the  heavy  operations  at  our  com- 


205 


mercial  marts,  in  the  splendid  fortunes  reported  to  be  made  by 
skilful  manipulations  in  tlie  gold  room  or  the  stock  board;  no 
evidences  of  increasing  wealth  in  the  fact  that  railroads  and 
steamboats  are  crowded  with  passengers  and  hotels  with  guests, 
that  cities  are  full  to  overflowing,  and  rents  and  the  prices  of 
the  necessaries  of  life,  as  well  as  luxuries,  are  daily  advancing. 
All  these  things  prove  rather  that  a  foreign  debt  is  being  cre- 
ated, that  the  number  of  non-producers  is  increasing,  and  that 
productive  industry  is  Ijeing  diminished.  There  is  no  fact  more 
manifest  than  that  the  plethora  of  paper  money  is  not  only  un- 
dermining the  morals  of  the  people  by  encouraging  waste  and 
extravagance,  but  is  striking  at  the  root  of  our  material  pros- 
perity by  diminishing  labor. 

The  withdrawal  of  the  legal-tender  notes  was  advo- 
cated because  the  Legal-Tender  Acts  were  a  war  meas- 
ure; because  the  opinion  w^as  then  universally  enter- 
tained that  the  Government  of  the  United  States  was 
one  of  limited  and  defined  powers  and  that  the  authority 
to  issue  notes  as  money  was  neither  expressly  given  to 
Congress  by  the  Constitution  nor  fairly  to  be  inferred, 
except  as  a  measure  of  necessity  in  a  great  national 
emergency;  and  I  hazard  the  opinion  that  such  will  be 
the  decision  of  the  Supreme  Court  when  the  qtiestion  is 
fairly  presented — a  decision  which  will  dispel  the  mon- 
strous delusion  and  heresy  that  have  taken  so  strong  a 
hold  upon  so  many  minds — that  all  that  the  Government 
needs  to  do  to  make  money  plentiful  and  the  country 
prosperous  is  to  put  the  printing  presses  at  work  upon 
its  promises  to  pay. 

And  now  how  stands  the  country  to-day  upon  the 
currency  question?  What  has  Congress  done  about  it? 
It  has  passed  an  act  virtually  remonetizing  silver  and 
demonetizing  gold.  It  has  prohibited  any  further  with- 
drawal of  the  United  States  notes.  Indeed,  the  Secre- 
tary is  compelled  by  law  to  exercise  his  wit  to  keep 
their  full  volume  in  circulation,  whether  he  have  need 
of  them  or  not.  Other  legislation  looking  still  more 
strongly  toward  inflation  was  only  defeated  by  slight 
disagreements  between  the  tw^o  houses,  decisive  action 
being  postponed  until  the  next  session. 

And  how  stands  the  man  at  the  helm  of  financial  ad- 
ministration, the  able,  the  adroit,  the  self-poised  Secre- 
tary of  the  Treasitry  ?  He  advocated  the  Legal-Tender 
Acts;  but  as  a  war  measure  only.     There  was,   when 


206 


the  bills  were  under  consideration,  no  intimation  from 
him  that  the  notes  to  be  issued  under  them  were  to  be 
a  permanent  currency.  If  there  had  been,  so  sound 
was  the  public  sentiment  at  that  time  upon  this  all-im- 
portant question,  that  the  measure  would  have  received 
but  a  meager  support  in  either  house,  and  he  has  since 
admitted  that  the  repeal  of  the  provision  that  these 
notes  might  be  converted  into  the  5.20  six  per  cent, 
bonds  at  the  will  of  the  holder,  was  one  of  the  greatest 
and  most  unfortunate  mistakes  committed  by  Congress 
during  the  war.  He,  alas,  has  become  tinctured  with 
the  greenback  mania.  He  now  favors  the  continued 
issue  of  these  notes,  limiting  the  amount  to  three  hun- 
dred millions. 

The  political  parties — how  stand  they  ?  There  can 
be  no  mistake  as  to  the  financial  polic}'  of  the  national 
or  greenback  party.  The  withdrawal  of  bank-notes 
and  an  issue  of  Government  notes,  based  upon  the 
wealth  of  the  country  and  equal  to  the  wants  of  the 
people,  commencing  with  a  thousand  or  fifteen  hundred 
millions,  to  be  increased  with  the  increase  of  popula- 
tion, is.  in  the  opinion  of  the  leaders  of  this  party,  to 
be  the  panacea  for  all  financial  troubles.  But  how  is  it 
with  what  have  been  heretofore  the  two  political  par- 
ties, which  since  the  adoption  of  the  Constitution  have 
been  contending  for  the  rule  of  this  great  countr}-  ?  Not 
a  single  platform  in  the  South  or  West,  except  that  of 
the  Republican  Convention  of  Michigan,  and  very  few 
in  the  Middle  and  Eastern  States  have  had  in  them  a 
sound  financial  plank.  All  the  conventions  have  been 
either  silent  or  doubtful  or  heretical,  and  mostly  hereti- 
cal, on  a  question  which  affects  the  welfare  of  every 
man  and  woman  in  the  United  States. 

It  is  especially  worthy  of  notice  that  by  none  has 
there  been  a  downright  endorsement  of  the  national 
banking  system.  Now,  what  is  this  system  which  so 
many  denounce  and  nobody  defends  ?  It  is  substantially 
the  old  State-bank  system,  with  a  circulation  perfectly 
secured  and  current  everywhere,  instead  of  a  circulation 
of  limited  credit  and  doubtful  solvency.  The  State 
banks  had  nothing  to  do  with  the  creation  of  it.  It  was 
forced  upon  them  by  national  necessities.     Not  a  bank 


207 

favored  the  passage  of  the  National-Currency  Act.  Few, 
if  any,  would  have  accepted  it  if  they  had  not  been 
forced  to  accept  it  by  the  law  which  taxed  their  circulat- 
ing notes  out  of  existence.  A  system  which  compels 
the  banks  to  secure  their  circulating  notes  by  United 
States  bonds,  with  a  margin  of  ten  per  cent.,  although 
the  bonds  may  be  worth  a  premium,  is  not  a  profitable 
system  to  bank  under.  The  national  banks  during  what 
was  called  the  flush  times,  between  1865  and  1873,  did 
as  most  people  did,  or  thought  they  were  doing — make  a 
.good  deal  of  money  upon  paper;  but  the  sifting  process, 
which  has  been  for  some  time  and  is  still  going  on,  re- 
veals the  unpleasant  fact  that  no  small  portion  of  their 
profits  was  apparent  rather  than  real.  I  know  vSomething 
of  the  old  State-bank  system.  I  have  given  some  atten- 
tion to  the  systems  of  other  countries;  and  I  do  not 
hesitate  to  sa}^  that  our  present  system,  although  not  a 
profitable  one  for  the  bankers,  is  the  best  system  for  the 
public  which  is  now  in  existence.  If  the  bank  act  is 
repealed  the  people  and  not  the  bankers  will  ultimatel}^ 
be  the  chief  mourners.  Banks  of  issue  exist  in  all  com- 
mercial countries,  and  they  will  exist  in  some  form  in 
the  United  States.  Without  them  enterprise  and  credit 
would  be  deprived  of  what  they  need  in  competing  with 
capital.  If  the  enemies  of  banks  were  to  undertake  to 
give  to  capitalists  the  control  of  business  they  could  not 
more  surely  and  effectually  accomplish  their  object  than 
by  prohibiting  the  incorporation  of  banks  of  issue. 

The  greenback  heresy  may  gain  strength,  and  for  a 
time  Government  notes  may  occupy  the  entire  field,  but 
it  will  be  for  a  time  and  a  short  time  only.  The  evil 
will  cure  itself,  but  at  an  enormous  sacrifice.  No  politi- 
cal party  has  ever  been  wise  enough  or  honest  enough 
to  be  trusted  with  the  power  of  supplying  the  country 
with  money  through  the  agency  of  the  printing  press. 
When  such  a  party  does  exist,  the  millennium  will  have 
dawned,  and  there  will  be  no  further  use  of  money  of 
any  kind.  Issues  of  Government  notes  are  not  a  nov- 
elty. This  experiment  has  frequently  been  resorted  to 
by  embarrassed  or  bankrupt  governments,  and  the  re- 
sult has  always  been  disastrous — disastrous  to  the  gov- 
ernments and  especially  to  the  people.     Congress  wisely 


208 


put  a  limit  upon  the  issue  by  the  acts  which  authorized 
it,  but,  limited  as  it  was,  it  was  a  great  misfortune  that 
the  exigencies  of  the  country  seemed  to  render  such  a 
measure  necessary.  That  necessity  passed  away  with 
the  war.  There  is  now  no  need  of  Government  notes. 
Gold  and  silver  and  convertible  bank-notes  are  all  that 
is  now  required  to  bring  back  the  country  to  a  healthy 
condition,  as  far  as  this  can  be  affected  b}'  money. 
There  will  be  no  stability  in  trade,  no  safe  foundation 
for  business  men  to  build  upon,  until  the  Government 
ceases  to  be  a  banker — until  the  public  sentiment  is  in 
accord  with  the  opinion  of  Mr.  Webster,  when  he  said: 

Most  unquestionably  there  is  no  leo^al  tender  in  this  country, 
under  the  authority  of  this  Government  or  any  other,  but  gold 
and  silver,  either  the  coinage  of  our  own  mints  or  foreign  coins 
at  rates  regulated  by  Congress.  This  is  a  constitutional  prin- 
ciple, perfectly  plain,  and  of  the  very  highest  importance.  The 
States  are  expressly  prohibited  from  making  anything  but  gold 
and  silver  a  legal  tender  in  payment  of  debts,  and,  although  no 
such  express  prohibition  is  applied  to  Congress,  yet,  as  Con- 
gress has  no  power  granted  to  it  in  this  respect  but  to  coin 
money  and  to  regulate  the  value  of  foreign  coins,  it  clearly  has 
no  power  to  substitute  paper  or  anything  else  for  coin  as  a 
legal  tender  in  payment  of  debts  and  in  discharge  of  contracts. 
Congress  has  exercised  this  power  full}'  in  both  its  branches. 
It  has  coined  money,  and  still  coins  it;  it  has  regulated  the 
value  of  foreign  coins,  and  still  regulates  their  value.  The 
legal  tender,  therefore,  the  constitutional  standard  of  value, 
is  established,  and  cannot  be  overthrown.  To  overthrow  it 
would  shake  the  whole  system. 

The  system  was  shaken  by  the  Legal-Tender  Acts. 
It  will  not  only  be  shaken,  but,  if  the  believers  in  the 
greenback  theory  obtain  the  control  of  the  Government 
and  the  Supreme  Court  does  not  come  to  the  rescue,  it 
will  be  completely  overthrown.  I  sa}^  nothing  against 
the  honesty  of  the  advocates  of  this  theory.  Many  of 
them  I  know  personally.  Their  sincerity  and  integrity 
I  have  no  right  to  doubt.  It  is  the  theorj^  which  they 
advocate  which  I  denounce;  and  I  denoiuice  it  because 
I  regard  it  as  being  at  war  with  the  best  interests  of  the 
country.  If  it  prevailed,  there  may  be  another  period  of 
unreal  but  seductive  prosperity;  but  it  will  be  followed 
by  disasters  far  more  serious  than  those  from  which  we 
seem  to  be  recovering,  even  if  the  end  be  not  the  climax 
of  national  dishonor — repudiation. 


209 


But,  it  may  be  asked,  will  not  danger  in  this  direction 
be  obviated  by  the  resumption  of  specie  payments, 
which  is  to  take  place  in  January  next?  Certainly  not, 
because  we  have  no  assurance  that  the  Resumption  Act 
will  not  be  repealed  at  the  next  session.  It  undoubt- 
edly will  be,  if  the  November  elections  indicate  that  a 
majority  of  the  people  favor  continued  and  further 
issues  of  United  States  notes.  And  what,  after  all  that 
has  been  said  about  it,  will  resumption  under  the  Silver 
Act  amount  to?  Silver  dollars,  worth  nine  per  cent, 
less  than  paper  dollars,  are  now  a  legal  tender.  The 
legal-tender  notes,  at  the  option  of  the  Secretary  of  the 
Treasury,  may  be  redeemed  in  either  silver  or  gold.  If 
the  demand  is  light,  the  redemption  will  be  in  gold;  if 
large,  in  silver.  No  man  can  know,  when  he  goes  to 
the  Sub-Treasury  for  coin,  which  he  will  receive.  The 
effect  of  the  Silver  Act  will  not  be  realized  until  silver 
bullion  is  treated  by  the  Government  like  gold  bullion, 
or  until  it  becomes  practically  the  only  standard,  as  it 
will  be  when  the  balance  of  trade  is  against  us,  instead 
of  being,  as  it  is  now,  in  our  favor.  Silver  is  now  at 
par  with  gold,  because  no  man  can  obtain  the  silver  dol- 
lar, worth  as  bullion  but  ninety-one  cents,  without  giv- 
ing the  gold  dollar  for  it.  All  this  will  be  changed  when 
silver  dollars  can  be  obtained  on  a  deposit  at  the  mint 
of  silver  bullion  less  the  slight  charge  for  mintage,  or 
when  the  Secretary  is  compelled  to  use  silver  in  pay- 
ment of  interest  on  the  public  debt  or  in  discharge  of 
other  obligations  of  the  Government.  Resumption,  as 
long  as  the  Silver  Act  is  in  force,  will  be  a  sham. 

But  would  it  be  so  if,  as  the  result  of  the  action  of 
the  Silver  Commission,  the  double  standard  should  be 
adopted  by  the  European  nations  ?  It  is  difficult  to  sa}^ 
what  might  be  effected  by  a  general  accord  of  the  na- 
tions upon  this  subject.  My  own  opinion  is,  that  the 
commercial  world  has  outgrown  the  use  of  silver  as  a 
standard  of  value  and  that  there  will  be  no  such  national 
accord.  Great  Britain,  which  has  derived  immense  ad- 
vantages by  having  adopted,  years  ago,  the  single  gold 
standard:  Germany,  which  at  great  pecuniary  loss  and 
at  no  little  disturlDance  to  exchanges  throughout  the 
world,   has   demonetized   silver;    France,   which  keeps 


210 

her  silver  coin  at  par  with  gold  by  limiting  the  coinage, 
so  as  to  make  it  practically  a  subsidiary  currency,  will 
be  parties  to  no  compact  making  silver  a  standard  of 
value  equally  with  gold.  Great  Britain,  which  is  losing 
heavily  in  her  Indian  revenues  by  the  depreciation  of 
silver;  Germany,  which  has  still  a  large  amount  of  sil- 
ver to  dispose  of;  the  Bank  of  France,  which  holds 
nearly  a  hundred  millions  of  silver  coin  which  it  has  no 
use  for,  and  which  it  could  not  sell  within  a  twelve- 
month without  incurring  a  loss  of  not  less  than  ten  or 
fifteen  millions  of  dollars,  would  hail  wnth  satisfaction 
any  action  of  other  nations  that  would  advance  even  tem- 
porarily the  market  price  of  an  article  in  which  they  have 
so  large  an  interest;  but  that  they  will  reverse  their  es- 
tablished policy  by  adopting  the  double  standard,  wdiich 
has  never  worked  well  wherever  it  has  been  tried,  is 
what  w^e  have  no  right  to  expect.  By  adopting  the 
double  standard  the  United  States  allies  itself  with 
China  and  India  and  the  second  and  third-rate  nations 
of  Europe,  instead  of  the  first;  and  the  laws  which 
have  heretofore  governed  international  trade  will  be 
changed,  if  the  consequences  are  not  injurious  to  its 
credit  and  a  drawback  upon  its  prosperity.  Although 
the  coinage  on  a  large  scale  has  but  recently  been  com- 
menced, silver  dollars  are  already  a  burden  and  they 
will  be  a  constantly-increasing  burden  upon  the  Treas- 
ury. There  is  a  higher  law  in  finance  as  well  as  in 
morals.  That  law  demands  in  all  commercial  nations 
gold  as  a  standard,  silver  as  a  subsidiary  currency.  The 
former  for  large  and  international  transactions;  the  lat- 
ter for  what  may  be  called  domestic  use.  For  these  pur- 
poses there  will  be  ample  demand  for  both. 

There  is  another  question  to  which  I  will  briefly  al- 
lude— a  question  which  agitates  and  troubles  other  coun- 
tries as  w^ell  as  our  own — the  labor  question.  The  busi- 
ness of  the  world  is  being  revolutionized;  fewer  men  are 
needed  in  its  transactions;  producers  and  consumers  are 
nearer  to  each  other;  the  raw^  material  is  being  manu- 
factured at  home,  and  machinery  is  doing  the  work  of 
hands  to  a  far  greater  extent  than  ever  before.  All  this 
is  telling  against  manual  labor.  The  capacity  to  pro- 
duce is  now  far  ahead  of  the  ability   to  consume.     The 


211 


consequences  are  dull  trade,  idle  mills,  idle  men,  rest- 
lessness, violence.  The  question,  What  shall  be  done 
with  the  thousands  which  this  revolution  has  thrown  out 
of  employment  ?  is  one  the  seriousness  of  which  cannot 
be  overestimated.  It  stands  before  us  to-day  in  new  po- 
litical organizations,  in  communism,  in  socialism.  Noth- 
ing of  this  kind  had  been  anticipated  in  a  country  where 
there  are  no  privileged  classes,  and  land  is  so  cheap  and 
homesteads  are  obtainable  on  the  Government  domain 
without  money  and  without  price;  but  the  fact  cannot 
be  denied  and  ought  not  to  be  disregarded,  that  there 
are  immense  numbers  of  men  not  only  in  our  large  cities 
and  manufacturing  districts,  but  in  the  agricultural 
States,  out  of  employment.  I  speak  not  of  those  who, 
too  lazy  to  work  and  too  cautious  to  rob  or  steal,  regard 
the  accumulations  of  industry  and  economy  as  a  wrong 
to  themselves,  but  of  those  who  are  willing  to  labor  and 
are  unwillingly  idle.  There  are,  I  believe,  more  men 
vainly  seeking  for  work  in  the  United  States  (a  large 
portion  of  whom  were  attracted  hither  from  other  coun- 
tries by  the  high  wages  which  were  paid  in  former  years) 
than  in  any  country  in  Europe.  Especial  danger  is  to 
be  feared  from  this  state  of  things,  because  these  men 
are  voters  and  have  no  little  influence  in  controlling 
elections.  Idleness,  especially  enforced  idleness,  brews 
mischief  and  is  dangerous  to  the  State.  Honest  employ- 
ment promotes  virtue;  idleness  vice.  Manual  labor  is 
reputable,  although  in  no  country  is  it  properly  respected; 
laboring  men,  as  a  class,  are  honest  men;  they  may  be, 
they  frequently  are,  led  astra_v  by  those  who  deceive 
them,  in  order  that  they  may  use  them  for  purposes  of 
their  own,  but  dishonest  they  are  not,  and  dangerous 
they  will  never  become  if  they  are  fairly  treated,  fur- 
nished with  employment,  and  receive  wages  sufficient 
for  their  own  support  and  the  support  of  their  families. 
There  is  little  danger  of  communistic  violence  in  the 
United  States.  Communism,  as  taught  by  its  fathers,  is 
opposed  to  violence.  It  originated  in  Europe,  It  was 
the  manifestation  of  dissatisfaction  with  dynastic  insti- 
tutions, with  a  social  order  which  sustained  one  class  at 
the  expense  of  another.  It  aimed  at  an  impossibility — 
q.t  not  only  equality  of  rights,  but  community  of  propr 


212 


erty.  It  took  a  light  hold  in  the  countries  in  which  it 
was  first  taught.  There  is  no  soil  in  which  it  can  take 
root  in  the  United  States.  The  rightful  claims  of  labor 
are  a  different  thing  altogether.  They  are  neither  com- 
munistic nor  socialistic.  They  are  claims  for  employ- 
ment, for  the  right  to  live,  and  these  are  claims  which 
demand  the  most  careful  consideration.  Why  don't 
these  idle  people  go  to  work?  asks  one  who  knows  as 
little  about  the  condition  of  the  laboring  classes  in  the 
United  States  as  he  does  about  the  condition  of  the  in- 
habitants of  the  South  Sea  Islands.  Why  don't  they  go 
West?  asks  another,  who  is  as  ignorant  of  the  West  as 
he  is  of  what  is  going  on  in  the  moon.  It  is  work  that 
so  many  idle  men — idle  not  through  their  own  fault,  but 
idle  by  the  substitution  of  machinery  for  hands — are  beg- 
ging for,  that  families  are  starving  for.  Steam  and  ma- 
chinery are  taking  the  place  of  hands  to  nearly  the  same 
extent  in  the  agricultural  as  in  the  manufacturing  dis- 
tricts. Doctor  Gwyn,  of  California,  cultivates  his  thirty- 
six  thousand  acres  in  wheat  almost  entirely  by  ma- 
chinery. The  heading,  thrashing,  winnowing,  bagging, 
are  all  done  with  the  use  of  less  hands  than  were  for- 
merly required  in  securing  the  crop  of  a  quarter  section. 
What  Doctor  Gwyn  is  doing  in  California  is  being  done 
on  a  smaller  scale  in  all  the  agricultural  States.  Ma- 
chinery cultivates  land,  as  steam  drives  the  locomotive, 
the  ship,  or  the  wheels  of  a  factory.  It  is  not  strange, 
therefore,  that  the  laboring  man  looks  upon  labor-sav- 
ing machinery  and  implements  as  his  enemies,  and  it 
is  by  no  means  certain  that  they  are  not.  Looking  at 
the  labor  question  as  humanitarians  regard  it,  it  is  in- 
deed questionable  if  labor-saving  machinery  is  not  work- 
ing against  the  security  of  society  and  the  welfare  of  the 
race.  Political  economists  do  not  take  this  view  of  it. 
They  care  nothing  for  instrumentalities.  They  look 
only  to  results,  and  to  results  in  a  particular  direction — 
the  increase  of  the  national  wealth — as  if  the  greatness 
of  a  nation  consisted  in  its  wealth  alone  and  not  in  the 
character  and  condition  of  its  people.  If  there  is  any 
science  in  the  world  that  needs  to  be  baptized  with  the 
spirit  of  the  Gospel  it  is  political  economy.  But,  how- 
ever we  may  philosophize  upon  thisyiew  of  the  subject, 


218 


the  march  of  steam  and  of  invention  for  the  saving  of  labor 
and  time  is  onward,  and  will  continue  to  be  onward,  no 
matter  what  may  be  the  effects  on  the  laboring  classes.  I 
know  it  is  denied  that  machinery  is  the  enemy  of  man- 
ual labor.  Has  not,  I  may  be  asked,  the  introduction  of 
machinery,  while  it  has  enormously  increased  produc- 
tion, increased  also  the  demands  for  labor  ?  Has  not 
this  been  the  case  in  England,  the  greatest  manufactur- 
ing country  in  the  world  ?  When  the  spinning  jenny  and 
other  labor-saving  machines  were  first  introduced  into 
the  manufacturing  districts  of  England,  was  there  not  an 
outcry  against  them  by  the  spinners  and  other  laborers 
who  supposed  their  means  of  living  was  in  danger  ?  And 
did  they  not  resort  to  violence  to  prevent  their  use,  as 
the  harvesters  in  some  of  the  Western  States  are  threat- 
ening to  do  to  prevent  the  use  of  agricultural  machines  ? 
And  was  not  the  result  of  this  introduction  immensely 
beneficial,  not  only  to  the  mill  owners  and  to  the  nation, 
but  to  the  laborers  themselves?  Were  they  not  better 
clothed  and  better  fed  than  ever  before  ?  Did  not  the 
use  of  machinery  in  England  increase  the  demand  for 
labor  and  the  wages  of  the  laborer?  Has  not  this  been 
the  case  always  and  everywhere,  and  will  it  not  continue 
to  be  so  ? 

In  considering  this  question  we  must  be  careful  not 
only  in  regard  to  our  facts,  but  our  inferences.  When 
labor-saving  machinery  was  first  set  in  motion  in  Great 
Britain  she  was  just  starting  as  a  manufacturing  nation, 
but  so  rapidly  did  she  move  in  this  direction  that  she 
soon  became  the  workshop  of  the  world.  For  thirty 
years  she  had  a  monoply  in  manufacturing.  The  raw 
material  from  the  ends  of  the  earth  were  sent  to  her  to 
be  made  up  and  returned  in  the  finished  fabric.  During 
this  period  her  gains  were  enormous,  and  the  demands 
for  labor  kept  pace  with  the  demands  for  the  products 
of  her  factories  and  shops.  This  is  no  longer  the  case. 
She  has  now  rivals  in  the  United  States,  on  the  conti- 
nent, in  her  colonies;  and  the  condition  of  her  laboring 
classes  would  be  deplorable  were  it  not  for  the  stream 
of  emigration  constantly  flowing  out  from  her  into  other 
lands,  and  the  far-sightedness  of  her  Government  in 
aiding  the  enterprise  which  pushes  her  trade  and  com- 


2l4 


riierce  into  every  port  of  the  world  which  is  open  to  hef 
ships. 

It  is  also  true  that  up  to  a  recent  period  machinery 
increased  rather  than  diminished  the  demand  for  manual 
labor  in  the  United  States.  It  may  be  so  again;  but  I 
do  not  see  what  reason  there  is  for  expecting  it.  The 
number  of  men  who  are  out  of  employment  may  not  be 
increasing;  but  it  is  uncomfortably,  dangerouslj^  large. 
Congress  has  done,  perhaps  can  do,  nothing  for  them. 
An  increase  of  currency  would  not  help  them.  Cur- 
rency is  already  superabundant.  Millions  of  greenbacks 
are  lying  idle  in  the  vaults  of  the  banks  for  want  of 
borrowers.  There  is  no  branch  of  industry  in  the 
United  States  languishing  for  want  of  money.  Relief, 
and  this  will  come  slowly,  can  only  come  from  that 
power  of  adjustment  which  exists  in  all  communities, 
and  from  an  increase  of  our  foreign  trade,  which  will 
increase  the  demands  for  our  products.  In  the  mean- 
time capitalists  must  be  content  with  small  profits.  Re- 
duction in  the  expenses  of  manufactories  and  railroads 
must  not  be  made  at  the  expense  of  their  employes 
only.  Stockholders  must  not  expect  dividends  on  capi- 
tal which  exists  only  on  the  books  of  the  companies. 
Those  who  have  money  to  spend  must  spend  freely; 
those  who  have  not  must  be  content  to  live  frugally. 
Laborers  must  be  treated  kindly  and  helped  to  employ- 
ment when  it  can  be  found.  There  must  be  no  sympa- 
thy with  the  opinion,  which  is  said  to  have  been  recently 
advanced  by  a  distinguished  clergyman,  that  "  we  should 
not  trouble  ourselves  when  we  see  men  suffering  from 
hunger  or  in  the  depths  of  misery.  That  starvation  is 
a  means  of  grace."  Hunger  may  be  a  means  of  grace 
by  rendering  a  man  willing  to  exchange  this  world  for  a 
better  one.  A  blessing  was  pronounced  by  the  Saviour 
upon  those  who  hunger  and  thirst  after  righteousness; 
but  blessed  are  they  who  hunger  for  bread  is  not  among 
the  beatitudes.  It  must  be  progressive  Christianity  which 
finds  a  saving  unction  in  starvation.  The  prescription 
may  be  a  good  one  for  those  who  believe  that  the  morti- 
fication of  the  flesh  is  a  necessary  preparation  for  the 
life  to  come;  but  it  would  hardly  suit  the  case  of  those 
so  little  spiritually-minded  as  laborers  are  supposed  to 


51g 

be,  and  who  might  like  the  prescription  better  if  it  came 
from  one  who  had  himself  tested  its  virtues. 

I  have  spoken  upon  subjects  which  seemed  to  be 
hardly  appropriate  to  the  day,  because  I  was  invited  to 
speak  upon  them  and  because  they  were  uppermost  in 
my  mind.  I  regret  my  inability  to  discuss  them  with 
more  satisfaction  to  myself  and  to  you.  They  are  not 
new  subjects;  but  they  cannot  be  stale  as  long  as  great 
interests  depend  upon  their  solution.  I  shall  not  have 
spoken  in  vain  if  anything  I  have  said  will  lead  to  a 
more  careful  consideration  of  them. 

Let  it  not  be  supposed  that  I  take  a  desponding  view 
of  the  future,  or  that  I  am  among  those  who  have  lost 
faith  in  republican  institutions.  I  do  not  and  would  not 
underrate  the  difficulties  we  have  to  contend  with  nor 
the  dangers  that  surround  us;  but  I  see  no  reason  for 
despondency.  We  have  made  many  mistakes;  we  may 
make  many  more  and  greater  ones;  but  the  people  of 
the  United  States  are  too  intelligent  and  patriotic  to  go 
long  astray  upon  subjects  so  interesting  to  them  as 
finance  and  labor.  Experience,  a  hard  but  efficient 
teacher,  will  put  them  right,  if  nothing  else  will  do  it. 
There  are  some,  I  know,  who  favor  a  stronger  Govern- 
ment than  was  established  by  those  whose  wisdom  and 
patriotism  we  this  day  commemorate — some  who  do  not 
hesitate  to  say  that  there  can  be  no  safety  where  all  men 
are  voters;  but  I  have  never  heard  the  expression  of 
such  an  opinion  from  one  who  did  his  full  dut}^  by  tak- 
ing an  active  part  in  politics.  If  the  country  is  not  well 
governed,  it  is  the  fault  of  those  who  have  the  most  at 
stake;  if  politics  is  a  "  dirty  business,"  it  is  because  in- 
telligence and  property  are  not  represented  in  primary 
meetings  and  at  the  polls;  if  the  machinery  which  gov- 
erns is  not  in  the  right  hands,  it  is  because  property 
holders  stand  aloof  and  leave  the  management  to  others. 
*'We  live  and  move  and  have  our  being"  in  a  political 
atmosphere.  We  cannot  escape  from  it  if  we  would. 
We  are  a  self-governed,  self-governing  people.  Every 
man,  to  the  extent  of  his  influence  and  his  vote,  is  re- 
sponsible for  the  laws  that  are  passed  by  the  legislature 
of  his  State  or  by  Congress,  and  for  the  manner  of  their 
administration.     He  cannot   escape  that  responsibility 


216 

t3y  declining  to  participate  in  nominations  or  elections. 
Professional  politicians  would  be  unknown  in  the  United 
States,  as  the}^  are  unknown  in  England  and  in  France, 
if  those  who  have  the  greatest  interests  to  be  protected 
did  not  fail  in  the  discharge  of  their  political  duties.  I 
have  no  patience  with  men  who  speak  of  our  republican- 
ism as  being,  in  the  language  of  the  day,  "played  out," 
while  they  have  never  lifted  a  finger  to  prevent  the 
evils  of  which  they  complain.  The  Constitution  of  the 
United  States  was  framed  by  men  pre-eminently  wise. 
The  Government  based  upon  it  is  better  adapted  to  the 
wants  of  men  and  the  advancement  of  a  Christian  civili- 
zation than  any  that  has  ever  been  organized.  If  it  fail 
in  the  object  aimed  at  by  its  founders,  it  will  not  ])e  from 
defects  in  itself.  If  we  do  our  duty,  as  the}^  did  theirs, 
republicanism  will  not  be  a  failure. 

We  have  much  to  encourage  us.  Providence,  by  the 
bountiful  crops  of  the  last  3"ear  and  the  promise  of  still 
more  bountiful  ones,  already  in  part  secured,  of  the  pres- 
ent season,  has  done  much  to  counteract  the  effects  of 
our  unfortunate  financial  legislation.  There  is  a  bright 
as  well  as  a  dark  side  to  the  picture.  We  present  this 
day  to  the  world  the  miracle  of  a  nation  heavily  in- 
debted to  other  nations,  and  yet  with  foreign  exchange 
in  its  favor;  of  a  nation  in  a  time  of  unparalleled  busi- 
ness depression  steadil^^  reducing  the  burden  of  its  debt. 
We  have  much  to  be  thankful  for,  and  for  nothing  more 
than  the  fact  that,  notwithstanding  the  efforts  that  are 
being  made  in  certain  quarters — efforts  as  unwise  in 
polic}'  as  they  are  unpatriotic,  to  perpetuate  antagonism 
between  the  North  and  South — the  union  of  the  States 
is  secure.  The  late  civil  war  was  peculiar  in  its  charac- 
ter. It  was  a  war  between  the  civilization  of  barbarism, 
if  this  be  not  a  solecism,  and  the  civilization  of  freedom; 
between  two  antagonistic  systems  existing  under  the 
same  Government — a  system  which  degraded  labor  and 
a  system  which  honored  it;  systems  so  widely  different 
as  to  lead  to  different  constructions  of  the  Constitution, 
one  section  interpreting  it  as  establishing  a  government 
of  the  whole  people,  the  other  as  establishing  a  copart- 
nership of  States;  s^^stems  involving  questions  which 
it  seemed  impossible  to  settle  b}^  discussion  and  which 


217 

were  at  last  put  to  rest  upon  the  battle-field.  The  at- 
tempted secession  of  the  Southern  States  was  an  act  of 
stupendous  folly,  under  the  circumstances  utterly  un- 
justifiable. This  much,  however,  may  be  said  in  palli- 
ation of  it.  The  people  of  the  South  never  acknowl- 
edged that  unqualified  allegiance  was  due  to  the  Federal 
Government.  They  had  been  taught  in  their  schools, 
in  their  colleges,  in  their  churches  even,  that  primary 
allegiance  was  due  to  their  respective  States.  Hence, 
they  believed  that  secession  was  not  treason.  A  traitor 
lives  only  to  be  abhorred,  audi  submit  that  the  appoint- 
ment of  Confederate  generals  to  important  Federal 
offices,  the  reception  given  them  by  the  people  of  the 
North,  irrespective  of  party;  the  honors  paid  in  Con- 
gress to  the  Vice-President  of  the  Confederacy,  which 
are  only  illustrations  of  Northern  sentiment,  preclude 
us  from  denouncing  secessionists  as  traitors.  On  one 
point,  however,  there  must  be  no  concession.  The  col- 
ored people  of  the  South  are  citizens  of  the  United  States 
and  entitled  to  all  the  rights  of  freemen.  Whether  their 
absolute  and  immediate  enfranchisement  was  wise  or 
not,  whether  it  has  so  far  resulted  in  their  benefit  or  not, 
is  not  the  question.  They  are  now  voters,  and  in  the 
use  of  the  ballot  they  must  be  as  free  and  unrestrained 
as  are  their  former  masters.  My  own  opinion,  however, 
is  that  this  is  a  matter  which  will  take  care  of  itself. 
The  true  interests  of  the  country  demand  that  there  shall 
be  no  "solid  South,"  and  there  will  not  be  when  efforts 
to  secure  political  ascendency  by  appeals  to  the  animos- 
ities created  by  the  war  prove,  as  they  will  soon  prove 
to  be,  abortive.  The  time  is  not  far  distant  when  the 
South  will  be  divided  on  the  questions  of  the  day,  and 
the  colored  vote  will  be  as  humbly  solicited  by  candi- 
dates for  office  as  what  is  called  the  foreign  vote  is  in 
the  North. 

Pardon  me  for  having  spoken  so  long,  and  permit  me 
to  congratulate  you  upon  the  fact  that  I  am  to  be  fol- 
lowed by  eloquent  speakers,  who  will  discourse  to  you 
upon  subjects  which,  if  not  more  important  than  those 
to  which  I  have  asked  your  attention,  are  certainly  more 
pleasing. 


LECTURES 

DKI<TVRRED   AT 

HARVARD   UNIVERSITY,  MAY,  1879. 


LECTURES 

DElvlVHRED   AT 

HARVARD    UNIVERSITY,  MAY,   1879. 


First  Lecture. 

MONEY. 

''I  do  not  know,"  said  a  Western  clergyman  to  me  in 
1 84 1,  "I  do  not  know  what  would  become  of  religion 
and  the  churches  were  it  not  for  hard  times.  Godliness 
makes  greater  conquests  and  more  converts  in  a  year 
of  financial  trouble  than  in  twenty  years  of  prosperity. 
You  must  have  noticed,"  said  he,  "that  all  our  great 
revivals  have  taken  place  when  a  sudden  check  has  been 
given  to  money-making,  and  adversity  has  come  over 
the  land  like  a  flood.  Religion  would  die  out  in  this 
money-worshiping  country  of  ours  were  it  not  for  com- 
mercial crises."  The  good  clergyman  was  not  far  from 
being  right  in  his  views  of  the  effect  of  hard  times  upon 
the  religious  sentiment,  nor  do  such  times  fail  to  bring 
with  them  some  compensation  by  leading  to  a  better  un- 
derstanding of  moral,  financial,  and  economic  laws. 
The  ethics  of  social  and  official  life,  economical  and 
financial  questions,  are  receiving  from  the  masses 
throughout  the  United  States  attention  which  they  failed 
to  receive  in  more  prosperous  days.  The  moral  atmos- 
phere is  clearing  up.  The  majesty  of  law  is  being  vin- 
dicated in  the  punishment  of  the  violators  of  trusts. 
Wealth  and  position  are  becoming  day  by  day  less  and 
less  potent  as  shields  for  crime  and  dishonesty,  and 
there  are  hopeful  indications  that  the  moral  sentiment 
of  the  nation  wnll,  ere  long,  reach  so  high  a  plane  that 
men  who,  while  keeping  within  the  letter  of  the  law, 


222 

and  having  a  wholesome  dread  of  its  penalties,  do  not 
hesitate  to  enrich  themselves  at  the  expense  of  those 
whose  interests  it  is  their  duty  to  protect,  will  be 
shunned,  if  they  cannot  be  punished,  as  criminals.  The 
observations  of  a  long  and  varied  life  have  shown  me 
that  there  are  no  men  more  pernicious  in  their  influence, 
and  very  few  more  dangerous  to  society,  than  those, 
some  of  whom  are  found  in  ever}^  community,  who 
gauge  their  conduct  by  the  statute  book;  who  regard 
nothing  as  being  wrong  which  is  not  a  clear  violation  of 
the  law;  who  make  it  a  study  to  ascertain  just  how  far 
the}'  can  go  in  dishonest  practices  without  being  in  dan- 
ger of  the  penitentiary.  We  sometimes  see,  strange  as 
it  appears,  indications  of  a  disposition  to  make  a  strict 
construction  of  statutes  a  justification  of  disregard  of 
honorable  obligations,  in  men  holding  high  political 
positions,  and  whose  personal  integrit}'  is  not  ques- 
tioned. We  had  an  illustration  of  this  in  the  treatment, 
by  prominent  men  of  both  of  our  great  political  parties, 
of  a  question  which  affected  the  national  honor,  but 
which  has  been  practically  settled,  for  the  present  at 
least,  by  the  resumption  of  specie  payments.  The 
bonds  of  the  United  States  issued  during  the  late  civil 
war,  when  their  value  depended  largely,  if  not  mainly, 
upon  the  result  of  the  war,  were  issued  and  sold  as 
gold  .bonds.  As  such  they  were  spoken  of  in  the  de- 
bates in  Congress.  They  were  so  pronounced  by  the 
officers  of  the  Government;  so  advertised  by  the  agents 
through  whom  they  were  offered  to  the  public,  with  the 
knowledge  and  implied  approval  of  Congress.  Every- 
body regarded  them  as  being  gold  bonds.  Without  this 
understanding  it  is  very  questionable  that  they  could 
have  been  sold.  If  there  had  been  an  intimation,  when 
the  Loan  Acts  were  under  consideration,  that  the  bonds 
which  were  to  be  issued  by  their  authority  might  be  re- 
deemed in  five  years  in  a  currency  the  value  of  which 
could  not  be  foreseen,  and  which  was,  in  fact,  greatly 
depreciated  when  they  became  redeemable,  the  Union 
might  have  perished  for  the  want  of  the  necessary 
means  for  the  prosecution  of  the  war.  It  is  difficult  to 
conceive  how  any  intelligent,  upright  man  could  doubt 
the  obligation  of  the  Government  to  pay  these  botjds  ii; 


223 

gold,  and  yet,  scarcely  had  the  war  been  concluded  and 
the  solvency  of  the  Government  become  assured,  when 
men   occupying  high   political   and   social  positions  be- 
gan to  agitate   the  question  as  to  the  currency  in  which 
they  might  be  redeemed,  and   to  contend  that  payment 
might  be  legally  made  in  United  States  notes,  inasmuch 
as  the  statute  only  provided  that  the  interest  should  be 
paid  in  coin,  but  was  silent  as  to  the  principal;  while  it 
must  have  been   clear  to  anyone  who  was  conversant 
with  the  history   of  the   Legal-Tender   Acts    that    this 
silence  was  owing  to   the  fact  that  provision  was  made 
in  them    (which   provision   was  subsequently  and  most 
unfortunately  repealed)  for  the  conversion  of  these  notes 
into  bonds,  and  that  nobody  then  supposed  that  notes 
issued  under  the  warpower  of  the  Government  would  be 
continued  in  circulation  after  the  war  was  ended.     Hap- 
pily  an  overwhelming  majority   of  the  people    of   the 
United  States  were  not  unwise  enough  nor  dishonorable 
enough  to  look  to  the  strict  letter  of  the  statute  for  the 
measure  of  their  obligations.     The  honor  of  the  Govern- 
ment was  maintained,  and   by  its  maintenance  the  bur- 
den of  the  national  debt  has  been  greatly  lightened  by 
the  reduction  of  interest,  which   otherwise  would  have 
been   impracticable.     The   student  of  the  political  his- 
torv  of  the  United  States  will   find  nothing  in  it  so  inde- 
fensible as   the  doctrine  advocated  by  men  of  large  in- 
fluence in  giving  direction  to  the  public  sentiment,  that 
a   great    nation    might,    without   dishonor,    violate    its 
pledges  to  its  creditors,   if  by  so  doing  the  letter  of  the 
law  was  not  violated.     The  old  adage,  that  "honesty  is 
the  best  policy,"  was  never  more  clearly  vindicated  than 
it  has  been  by  the  manner  in  which  the  public  interests 
have  been  promoted  by  the  maintenance,  by  the  people, 
of  the  honor  of  the  Government,  in  their  treatment  of 
its  bonded   debt.     I  have   great  confidence   that  other 
financial  questions,  and  economical  questions  also,  will 
be   settled  with   equal   wisdom   and  integrity  after  they 
have  been  carefully  and  calmly  considered.     The  pres- 
ent is  a  favorable  time  for  their  consideration.     A  great 
many  false  notions   are  to  be   corrected,  a  great  many 
heresies   are   to  be    exploded,   before    perfectly    sound 
ground  will  be  reached;  but  it  will  be  reached  if  the 


224 

questions  to  be  discussed  are  discussed  fairly  and  freely, 
and  when  it  is  reached  some  of  the  most  serious  ob- 
structions to  the  progress  of  the  country  in  the  paths  of 
honor  and  prosperity  will  be  removed.  It  is  fortunate, 
so  far  as  financial  questions  are  concerned,  that  there  is 
no  sectionalism  to  be  contended  with.  All  parts  of  the 
country  have  a  deep,  if  not  an  equal,  interest  in  their 
settlement.  We  are  now  prepared  to  take  our  financial 
reckoning  under  circumstances  which  are  not  likely  to 
mislead.  We  are  neither  exulting  in  prosperity  nor  are  we 
prostrated  b}^  reverses.  The  experiences  of  the  last  five 
years  have  sobered  us.  We  are  not  as  comfortable  as 
we  would  like  to  be,  but  we  are  not  troubled  as  we  have 
been;  the  crisis  is  over;  the  clouds  are  passing  away; 
the  movement,  slow  but  sure,  is  now  onward.  Nothing 
can  prevent  the  United  States  from  taking  the  lead  of 
the  nations  in  all  that  constitutes  true  national  greatness 
but  vital  mistakes  upon  questions  which  lie  at  the  basis 
of  national  prosperity.  One  of  these  questions  I  pro- 
pose to  consider  briefly  in  this  lecture — money,  its 
character  and  offices — what  money  is,  and  what  are  its 
legitimate  uses.  It  is  an  old  question,  and  I  do  not  ex- 
pect to  say  anything  new  upon  it.  It  is,  however,  fun- 
damental, and  one  in  regard  to  which  there  is  much  di- 
versity of  opinion.  In  this  lecture  I  shall  speak  of  gold 
and  silver  as  jointly  constituting  money;  in  my  next,  of 
the  changes  which  are  constantly  taking  place  in  their 
comparative  value. 

It  is  unfortunate,  I  think,  that  the  usual  definition  of 
money  has  been  so  liberal.  In  a  dictionary  of  the  high- 
est authority  it  is  defined  as  "cash,  or  current  token,  or 
representative  of  value,  as  bank-notes  exchangeable  for 
coin,  notes  of  hand,  accepted  bills  on  mercantile  houses, 
etc.,  etc."  Such  a  liberal  definition  has  led  to  much 
confusion  and  misconception.  The  idea  that  all  substi- 
tutes for  money,  obligations  which  require  money  for 
their  fulfilment,  mere  evidence  of  debt,  are  money,  has 
given  rise  to  many  and  serious  errors  in  regard  to  an 
article  about  the  character  of  which  there  should  be  no 
misunderstanding.  In  speaking  of  mone3%  I  shall  hold 
to  what  I  consider  the  true  definition,  a  definition  strictly 
adhered  to  by  the  franiers  of  pur  Federal  Constitution, 


225 

according  to  which  no  obligations  of  an}^  kind  can  be 
properly  called  money.  They  may,  to  a  certain  extent, 
take  the  place  of  it,  but  they  are  not  money;  they  are 
merely  evidences  of  debt  in  one  form  or  another.  Gold 
and  silver  coins  alone  are  money;  they  are  money  be- 
cause by  common  consent  of  the  nations  they  have  been 
so  declared,  and  from  time  immemorial  have  been  so 
used,  and  because  they  possess  in  themselves  intrinsic 
value.  They  are  something  more  than  tools,  as  they 
are  sometimes  called;  something  more  even  than  a 
measure  of  value;  they  are  precious  metals,  costing 
what  they  represent  as  money  in  the  labor  required  to 
obtain  them.  Coined  money,  therefore,  depends  for  its 
value  not  upon  the  authority  which  stamps  it,  but  upon 
the  quantity  of  pure  metal  which  it  contains.  Each 
government  exercises  the  right  of  coining  its  own 
money,  but  its  power  in  this  respect  is  limited  by  the 
law  which  governs  commercial  nations  to  deciding  in  what 
form  it  shall  be  issued,  and  giving  it  a  name.  No  gov- 
ernment can  give  to  its  coins  a  real  value  which  they 
do  not  possess  as  metals.  Attempts  have  frequently 
been  made  by  impecunious  monarchs  to  do  this,  but 
their  success  has  not  been  such  as  to  warrant  further  ex- 
periments in  this  direction.  Under  the  Constitution  of 
the  United  vStates  Congress  has  the  power  to  coin 
money,  but  this  power  must  be  exercised  in  subordina- 
tion to  a  law  superior  to  the  Constitution.  If  it  should, 
as  it  has  the  Constitutional  authority  to  do,  cause  eagels 
to  be  coined  containing  no  more  pure  gold  than  is  now 
contained  in  half- eagles,  and  should  make  them  by  law 
a  legal  tender  for  ten  dollars,  their  real  and  commercial 
value  would  still  be  but  five  dollars.  By  making  them 
a  legal  tender  for  ten  dollars  it  would  enable  debtors  in 
the  United  vStates  to  take  advantage  of  their  creditors 
on  contracts  existing  at  the  time  when  the  law  became 
operative,  but  not  on  subsequent  ones.  The  imposition 
could  not  be  repeated,  as  all  subsequent  contracts  would 
be  made  to  conform  to  the  then  existing  law.  There 
would  simply  be  a  new  standard,  under  which  the  new 
eagle  would  have  only  one-half  the  purchasing  power 
of  the  old  one. 


226 

Congress  has  also  the  power,  under  the  Constitution, 
not  only  to  coin  money,  but  to  regulate  the  value  of 
foreign  coins.  For  many  years  after  the  present  Gov- 
ernment was  formed  certain  foreign  coins  were  received 
in  payment  of  duties  and  were  a  legal  tender,  the  value 
thereof  being  fixed  by  Congress,  according  to  the  gold 
or  silver  which  they  contained,  measured  by  the  United 
States  standard.  Such  coins  are  no  longer  a  legal  tender, 
nor  receivable  by  the  United  States  in  payments;  but 
in  fixing  the  cost  price  of  articles  purchased  in  foreign 
countries,  which  are  subject  to  duties,  a  value  is  put 
upon  them  according  to  their  mint  value.  Thus,  for 
instance,  in  estimating  the  cost  of  articles  purchased  in 
Great  Britain,  the  pound  sterling  is  estimated  at  $4.86^?;^. 
In  determining  the  cost  of  articles  purchased  in  France 
the  Napoleon,  or  twenty-franc  piece,  is  estimated  at 
$3.86/0,  and  this  valuation  is  put  upon  them  because 
they  contain  the  amount  of  gold  represented  by  these 
figures.  Foreign  coins  in  the  United  States  are,  to  a 
certain  extent,  a  commodity,  but  they  differ  materially 
from  other  commodities;  they  have  a  mintage  value  and 
they  have  also  a  commercial  value  as  a  medium  of  ex- 
change. If  the  exchange  is  in  favor  of  the  countries 
that  issued  them,  or,  in  other  words,  if  they  have  more 
purchasing  power  in  those  countries  or  in  other  coun- 
tries where  purchases  are  being  made  than  they  have  at 
the  mint,  they  are  exported.  If  they  are  worthless,  in- 
cluding the  cost  of  transmission,  they  go  into  the  cru- 
cible and  are  transformed  into  coins  of  the  United  States. 
Congress  can  regulate  the  value  of  foreign  coins  in  trans- 
actions in  which  the  Government  is  a  party;  beyond  this 
it  is  powerless.  Their  value  was  not  diminished  by  the 
change  of  law  which  prevented  their  being  received  in 
payment  of  public  dues.  It  would  not  be  materially  af- 
fected if  they  could  not  be  recoined  in  the  United  States. 
They  contain  a  certain  quantity  of  gold,  and  they  will 
be  worth  in  the  market,  no  matter  how  they  may  be 
treated  by  the  Government,  what  the  gold  in  them  is 
worth,  less  the  cost  and  risk  of  transporting  them  to  other 
countries.  The  same  rule  holds  good  in  regard  to  United 
States  coins.  They  are  worth  in  other  countries  what 
the  metal  in  them  is  worth.     If  needed  for  purchases  or 


227 


payments  in  the  United  States,  they  may  fetch  slightly 
more,  but  their  value  is  substantially  fixed  by  the  amount 
of  gold  or  silver  which  they  contain.  A  very  small  por- 
tion of  the  coin  which  is  sent  from  one  nation  to  another 
is  returned  unchanged  in  form  to  the  nation  which  issued 
it;  nearly  all  goes  to  the  mint  and  is  recoined.  So 
true  is  it  that  coins  are  worth  only  what  the  metal  in 
them  is  worth,  that  gold  coins  and  silver  coins,  when  the 
amount  to  be  handled  is  considerable,  are  weighed  in- 
stead of  being  counted,  partly  for  the  saving  of  labor, 
but  mainly  for  the  ascertainment  of  their  exact  value; 
for,  notwithstanding  the  fact  that  alloy  is  used  in  the 
coinage  of  gold  and  silver  in  order  that  the  coins,  by 
being  hardened,  may  bear  the  usage  to  which  they  are 
to  be  subjected,  there  is  considerable  abrasion  while 
they  are  in  use,  and  they  do  not,  for  a  great  length  of 
time,  retain  their  full  weight.  It  is  on  this  account  that 
nations  so  frequently  recoin  their  own  money,  so  that 
none  shall  be  in  circulation  after  its  value  has  been,  even 
in  a  very  slight  degree,  affected  by  wear.  The  British 
Government  is  very  particular  on  this  point.  M}^  im- 
pression is,  that  the  weight  of  every  sovereign  that  goes 
into  the  Bank  of  England  is  tested  b}^  a  very  interesting 
piece  of  mechanism,  which  many  of  ni}-  hearers  may 
have  seen  at  work,  which  automatically  weighs  each  piece 
separately  and  dooms  to  the  melting  pot  every  one  whose 
weight  and  consequent  value  has  been  impaired  by 
abrasion.  These  simple  facts,  with  which  everyone 
ought  to  be  familiar,  should  put  at  rest  all  questions  in 
regard  to  the  character  of  money.  It  is  simply  gold  and 
silver  coin,  the  value  of  which  depends,  not  upon  the 
act  of  the  Government  that  coins  it,  but  upon  its  intrin- 
sic value,  according  to  a  universal  standard,  w^hich,  ex- 
cept for  local  and  subsidiary'  purposes,  cannot  be  materi- 
ally changed  by  any  one  nation,  nor  can  it  be  changed 
by  all  nations  together  without  great  confusion  and  mis- 
chief. No  substitute  for  these  metals  for  coinage  and  a 
measure  of  value  has  been  found,  and  none  is  likel}'  to 
be  discovered.  As  a  measure  of  value,  their  utility 
would  not  be  affected  by  diminished  production,  although 
th^ir  purchasing  power  would  be.  The  purchasing 
power  of  gold  was  diminished  by  the  enormous  yield  of 


228 

Californian  and  Australian  mines,  but  as  this  diminution 
of  the  purchasing  power  was  universal,  no  injury  resulted 
from  it.  Every  dollar  which  is  taken  from  the  mines 
adds  its  value  to  the  capital  of  the  world:  some  four 
thousand  millions  of  dollars  have  been  added  to  this  capi- 
tal since  g,)ld  was  discovered  in  California;  and.  although 
these  dollars  have  cost  in  labor  all  they  are  worth,  the 
world  lias  been  greatly  the  gainer  by  this  vast  addition 
to  its  permanent  wealth. 

Gold  aid  silver  have  a  universal  and  inlestructible, 
although  not  unchanging,  value,  and  represent  more  than 
anything  else  does  the  accumulated  and  active  capital 
of  the  world.  They  are  not  among  the  commodities 
that  perish  in  the  using;  they  are  wealth,  in  the  largest 
sense  of  the  word.  In  discussing  officially  the  currency 
question  in  1866,  I  made  the  following  remarks,  which 
I  trust  I  may  be  pardoned  for  repeating: 

An  irredeemable,  and  consequently  depreciated,  currency, 
drives  out  of  circulation  the  currency  which  is  superior  to  it- 
helf.  By  being  made  a  legal  tender,  while  its  real  value  is  not 
thereby  enhanced,  it  becomes  a  false  and  demoralizing  stand- 
ard, under  the  influence  of  which  prices  advance  in  a  ratio  dis- 
proportionate even  to  its  actual  depreciation.  Very  different 
from  this  is  that  gradual  and  general  advance  of  prices  which 
is  the  effect  of  the  increase  of  the  precious  metals.  The  gold 
and  silver  obtained  in  gold  and  silver  producing  districts, 
although  they  at  first  advance  the  prices  within  those  districts, 
following  tlie  course  of  trade  and  in  obedience  to  its  laws,  soon 
find  theiV  wav  into  other  countries,  and  become  a  part  of  the 
common  stock  of  the  nations,  which  increasing  in  amount  by 
the  regular  products  of  the  mines  and  in  activity  by  the  grow- 
ing demands  of  c<3nimerce,  advances  the  prices  of  labor  and 
commodities  througliout  the  civilized  world.  Thus,  the  pro- 
ducts of  the  Anit^ican,  Avistralian,  and  Russian  mines  tend  first 
to  advance  prices  in  tht-ir  respective  localities,  but  the  opera- 
tion of  trade  soon  distributes  them,  and  enterprise  evervwhere 
feels  and  responds  to  the  increase  of  the  universal  measure  of 
value.  All  this  is  healthful  because  slow,  permanent  and  uni- 
versal. 

In  considering  the  fact  that  prices  have  not  increased 
correspondingly  with  the  increase  of  gold  and  silver 
within  the  last  thirty  years,  some  very  intelligent  men 
have  come  to  the  conclusion  that  these  metals  are  onl}^ 
theoreticalh^  a  measure  of  value.  If  they  are  what  is 
claimed  for  them,  how  has  it  happened,  it  is  asked,  that 


220 


while  their  amount  in  circulation  has  been  nearly 
doubled  within  the  period  named,  there  has  been  no 
corresponding  advance  in  prices?  Elaborate  tables  have 
been  prepared  in  London,  which  show  that  the  average 
prices  of  twenty-two  leading  articles  in  Great  Britain 
were  no  higher  in  1878  than  in  1851;  that  they  did  ad- 
vance, by  temporary  influences,  chiefly,  I  think,  by  the 
large  exportation  of  gold  from  the  United  States  be- 
tween 1850  and  1864,  but  gradually  fell  off  again  until 
1878,  when  they  had  receded  to  the  starting  point. 
Now,  as  some  three  or  four  thousand  millions  of  dollars 
had  been  added  to  the  world's  stock  of  gold  and  silver, 
and  there  had  been  no  permanent  advance  in  prices, 
with  what  propriety,  it  is  asked,  can  thej^  be  regarded  a 
measure  of  value?  It  is  more  triumphantly  asked  if 
prices  are  measured  by  money,  and  the  United  States 
notes  and  bank-notes  have  the  same  influence  (as  they 
undoubtedly  have)  upon  local  prices  as  gold  and  silver, 
how  is  the  fact  to  be  explained  that  in  the  United  States 
property  of  nearly  all  kinds  is  as  low,  if  it  is  not 
lower,  to-day  than  it  was  in  i860,  when  the  volume 
of  currency  was  two-thirds  less?  Apolitical  economist 
(which  I  do  not  claim  to  be)  before  answering  the  ques- 
tion would  say  that  value  and  prices  are  not  the  same 
things;  that  values  are  the  relations  which  commodities 
bear  to  each  other,  while  prices  are  what  the  commodi- 
ties are  worth  according  to  an  existing  standard  =  While, 
however,  it  may  be  advisable  in  scientific  discussions  to 
draw  a  line  of  distinction  between  them;  while  it  is  true 
that  commodities  have  convertible  relations  of  value, 
without  reference  to  any  standard,  and  that  prices  rise 
and  fall,  while  the  standard  remains  unchanged,  values 
and  prices  in  all  business  transactions  are  regarded  as 
having  practically  the  same  meaning.  What,  then,  is 
the  explanation  of  the  fact  that  prices  have  not  perma- 
nently risen  with  the  increase  of  the  measure  of  value? 
Many  minor  and  temporary  causes  have  been  at  work  to 
prevent  this,  but  two  have  been  especially  influential. 
Within  the  last  thirty  years  the  commerce  of  the  world 
has  been  trebled.  By  this  increase  of  commerce  there 
has  been  an  increased  demand  for  the  precious  metals, 
and  a  diffusion  of  them  among  the  nations,  v/liich  has 


230 


tended  to  preserve  and  equalize  to  a  great  degree  their 
purchasing  power.  At  the  same  time  the  prices  of  most 
articles  in  use  have  been  prevented  from  permanent  ad- 
vancement by  an  increase  of  production.  These  two 
causes,  operating  in  different  ways — the  diffusion  of 
gold  throughout  the  world  by  the  demands  of  rapidly 
growing  international  trade,  and  the  enormous  increase 
of  production  resulting  from  labor-saving  machinery — 
sufficiently  explain  what  has  seemed  to  many  to  be  inex- 
plicable. Commerce,  by  diffusing  the  precious  metals, 
has  prevented  large  reductions  in  their  purchasing 
power;  machinery,  by  cheapening  the  cost  of  manufac- 
tures, and,  to  some  extent,  of  agricultural  products,  has 
prevented  an  advance  of  prices,  and  thus,  interrupted 
only  by  temporary  causes,  a  general  equilibrium  has 
been  maintained.  While,  however,  the  general  diffu- 
sion of  gold  and  silver  tends  to  give  a  steadiness  to 
their  measuring  power,  it  has  not  prevented  a  diminu- 
tion of  it.  Gold  and  silver  have  undoubtedly  been 
steadily  decreasing  in  power  for  years,  and  this  decrease 
may  goon,  as  heretofore,  for  years  to  come;  but  as  this  de- 
crease will  be  universal,  their  quality  as  a  measure  of 
value  will  not  be  affected.  A  paper  currency,  on  the 
other  hand,  having  no  general  diffusibility,  has  a  ten- 
dency to  advance  local  prices  to  a  much  greater  degree 
than  specie.  Prices  in  the  United  States  were  greatly 
advanced  by  a  paper  currency  during  the  war  and  after 
it,  and  although  there  is  now  more  specie  and  paper 
money  in  the  Treasury,  in  the  banks,  and  in  circulation 
than  ever  before,  almost  everything  the  value  of  which 
is  measured  by  money  is  down  to  anti-war  prices.  Here 
we  have  an  instance  of  a  great  decline  of  prices  without 
any  diminution  of  currency,  of  an  increase  of  the  pur- 
chasing power  of  money  while  there  is  a  superabun- 
dance of  it,  and  the  rates  of  interest  are  lower  than 
ever  before.  There  is  no  mystery  in  this.  During  the 
war,  and  especially  for  eight  years  after  its  termination, 
prices  were  speculative.  The  crisis  of  1873  revealed 
their  fictitious  character — the  real  financial  condition  of 
the  country.  The  disasters  which  followed  this  crisis 
were  the  natural  consequences  of  unwise  investments 
and  wanton   extravagance;    the    subsequent   and  long- 


231 


continued  depression,  the  inevitable  result  of  the  disas- 
ters. The  plentifulness  of  currency  did  not  prevent  a 
decline  in  prices.  It  was  powerless  against  the  causes 
which  were  working  in  that  direction.  There  has  never 
been  a  time  since  1873  when  an  increase  of  paper  money 
would  not  have  aggravated  instead  of  lessening  the  evils 
from  which  the  countr}^  was  suifering.  Nothing,  there- 
fore, can  be  more  unwise  than  the  effort  which  is  now 
being  made  to  advance  prices,  revive  industry,  and  re- 
store prosperity  by  an  increase  of  paper  money. 

Prices  did  advance  as  a  consequence  of  large  additions 
to  the  circulating  medium  between  1865  and  1873.  They 
declined  rapidly  after  the  crisis.  The}^  are  not  advanc- 
ing now  because  supply  is  equal  to  demand  on  present 
ratios,  because  business  is  not  speculative,  because  re- 
action has  not  reacted,  and  because  the  policy  of  the 
Government  in  regard  to  the  finances  and  taxation  is 
not  such  as  to  inspire  confidence.  The  condition  of  the 
country  is  abnormal,  and  the  fact  that  the  prices  of 
nearl}^  all  commodities  and  of  real  estate  are  low,  while 
currency  is  abundant,  does  not  in  any  manner  affect  the 
general  principle  that  money  is  a  measure  of  value. 

Gold  and  silver,  in  addition  to  their  use  as  a  circulat- 
ing medium  and  measure  of  value,  have  very  great  im- 
portance in  another  respect;  they  are  the  regulators  of 
trade  between  nations.  They  are  in  some  respects  to 
trade  what  the  governor  is  to  the  steam  engine,  show- 
ing to  the  engineer  the  amount  of  pressure  there  is  upon 
the  boiler  and  when  that  pressure  is  becoming  danger- 
ous. Trade  is  barter,  and  gold  and  silver  are  needed  to 
regulate  it;  mainly  carried  on  between  nations  b}^  an 
exchange  of  their  productions,  the  movement  of  the 
precious  metals,  unless  prevented  by  temporary  or  arti- 
ficial causes,  indicates  unerringl}^  how  that  trade  is  re- 
sulting and  on  which  side  is  the  debit  or  the  credit 
balance. 

The  amount  of  gold  and  silver  in  use  by  commercial 
nations,  as  currency  or  as  bullion,  is  insignificant  in  com- 
parison with  the  amount  of  their  foreign  exchanges,  and 
no  nation  can  afford  to  carry  on  a  trade  wdiich  leaves  a 
continuous  balance  against  it.  It  is  true  that  the  United 
States  do  continue  to  trade  with  India,  and  China,  and 


232 


Brazil,  and  pay  for  their  purchases  chiefly  in  the  pre- 
cious metals  or  in  exchange  on  London.  This,  how- 
ever, is  exceptional,  and  trade  with  these  nations  can 
be  maintained  because  the  amount  needed  to  cover  pur- 
chases is  furnished  by  the  sale  of  our  agricultural  pro- 
ductions and  our  manufactures  in  Europe.  It  is  not 
necessar}^  that  our  trade  with  any  particular  nation 
should  be  in  our  favor  or  not  against  us,  but  it  is  neces- 
sary^ that  the  balance  of  our  trade  with  foreign  nations 
(to  be  settled  by  shipments  of  gold  and  silver)  should 
not  in  the  aggregate  be  unfavorable.  I  shall  speak  more 
directly  and  fully  on  this  point  when  I  come  to  speak  of 
foreign  exchange. 

International  trade  being  an  exchange  of  national  pro- 
ducts, something  is  needed  to  indicate,  before  it  leads 
to  embarrassment,  how  this  trade  is  resulting;  gold  and 
silver  answer  this  purpose  because  the}'  are  the  only 
articles  which  have  a  substantial  uniformity  of  value 
and  are  universally  desired.  The  flow  of  water  to  a 
level  is  not  more  direct  and  uniform  than  is  the  flow  of 
these  metals  from  the  debtor  to  the  creditor  nation  when 
there  are,  as  has  been  said,  no  temporary  or  artificial 
impediments  to  prevent  it.  In  the  absence  of  such  im- 
pediments, large  balances  do  not  exist,  and  small  bal- 
ances are  settled  without  embarrassment  to  the  debtor 
nation.  Whatever  embarrassment  arises  in  international 
trade  is  the  result  of  loans  or  of  a  vicious  system  of  credits 
which  postpone  settlements  until  they  become  difficult, 
and  frequentl}'  render  payment  impossible. 

I  might  here  be  asked  how  it  happens,  if  the  move- 
ment of  the  precious  metal  is  indicative  of  the  course  of 
trade  and  the  current  is  from  debtor  to  creditor  nations, 
that  Great  Britain,  the  great  creditor  nation  of  the 
world,  is  frequently  so  large  a  loser  of  gold  as  to  create 
uneasiness  and  sometimes  panics  in  London.  The 
explanation  is  very  simple.  Great  Britain  is  not  only  a 
capitalist,  but  a  money  lender.  Her  gains  for  a  long 
period,  especially  between  1830  and  1873,  were  enor- 
mous. All  nations  paid  tribute  to  her  as  the  great 
workshop  and  common  carrier  of  the  world,  and  nearly 
all  became  borrowers  of  the  capital  to  the  creation  of 
which  they  had  contributed.     For  many  years  her  gains 


233 


were  estimated  at  from  $750,000,000  to  31,000,000,000 
per  aniiuin.  In  consequence  of  her  great  wealth,  money 
has  been  more  abundant,  cheaper,  and  more  easily  ob- 
tained in  England  than  elsewhere,  and  her  loans  and 
discounts  have  been  so  liberal  as  frequently  to  cause  a 
large  outflow  of  gold.  This  outflow  has,  however,  been 
checked  and  the  current  turned  in  her  favor  b\^  the  ac- 
tion of  the  Bank  of  England,  which,  by  raising  the  rate 
of  interest,  has  rendered  London  less  attractive  to  bor- 
rowers, and  by  the  repayment  of  temporar}-  loans  and 
the  returns  of  a  very  large  and  profitable  foreign  trade. 
The  time  required  to  effect  this  change  has  depended 
upon  the  extent  to  which  loans  had  been  made,  but  it 
has  sooner  or  later  been  effected,  and  usuall}-  without 
much  financial  disturbance.  For  the  payment  of  the 
indemnity  exacted  by  her  conqueror,  France  was  a  large 
borrower  in  London  on  bills  of  exchange,  which  were 
passed  over  to  the  German  Government,  the  proceeds 
of  which  as  they  matured — Germany  being  at  that  time 
preparing  to  adopt  the  single  standard — were  drawn  in 
gold,  and  the  drain  became  so  heavy  as  to  compel  the 
bank  to  advance  the  rate  of  interest,  step  by  step,  from 
three  per  cent,  to  nine,  while  the  current  market  rate 
was  even  higher. 

The  debt  relations  between  the  United  States  and 
Europe  during  the  last  three  years  have  been  peculiar. 
By  reason  of  our  diminished  importations  of  foreign 
goods  and  our  large  exports  of  agricultural  products  the 
net  balance  in  our  favor,  after  deducting  the  cost  of 
freights,  the  payment  of  interest  on  our  foreign  debt  and 
the  expenditures  of  Americans  abroad,  has  not  been  less 
during  the  period  named  than  $300,000,000.  This  large 
balance,  according  to  the  ordinary  law^s  of  trade,  would 
have  caused  a  flow  of  gold  from  London,  the  interna- 
tional clearing  house,  which  would  not  only  have  seri- 
ously embarrassed  the  Bank  of  England,  but  which 
would  have  very  considerably  affected  the  exchanges 
of  the  worl'J,  had  it  not  been  for  the  fact  that  Great 
Britain  and  Germany,  her  debtor,  were  large  holders  of 
United  States  securities,  by  the  return  of  which  the  ex- 
changes have  equalized.  This,  however,  does  not  in- 
validate the  rule  that  specie  is  the  regulator  of  interna- 


234 


tional  trade.  It  was  fortunate  for  both  nations  that 
Great  Britain  was  the  holder  or  controller  of  our  Gov- 
ernment bonds  and  other  securities  for  which  there  was 
an  active  demand  in  the  United  States.  If  this  had  not 
been  the  case  Great  Britain  and  the  European  nations 
indebted  to  her  would  have  been  compelled  either  to 
diminish  their  purchases  of  American  productions,  which 
would  have  been  injurious  to  the  United  States,  or  to 
part  with  large  amounts  of  gold,  which  would  have  been 
embarrassing  to  them.  The  liquidation  of  the  balance 
in  our  favor  was  natural  and  easy;  we  have  been  paid 
for  our  productions,  to  a  considerable  extent,  in  our  own 
obligations,  by  which  means  our  foreign  indebtedness 
has  been  so  greatly  reduced  that  it  cannot  hereafter  be 
troublesome.  Our  condition  is  on  the  whole  better  than 
it  would  have  been  if  gold  had  come  to  us  instead  of 
our  securities,  which  in  foreign  hands  would  be  a  con- 
stant drain  upon  the  country  in  payment  of  interest  and 
give  cause  for  apprehension  that  they  might  be  returned 
when  the  country  was  not  in  a  condition  to  receive  them. 
I  may  here  remark  that  there  is  scarcely  a  surer  indica- 
tion of  the  poverty  or  wealth  of  a  nation  than  the  situa- 
tion of  its  public  debt.  Most  nations,  at  some  period  of 
their  history,  are  under  the  necessity  of  borrowing  of 
other  nations,  and  the  bonds  which  they  issue  remain 
in  foreign  hands  until  their  people  are  able  to  bring  them 
home.  France,  as  I  have  stated,  borrowed  largely  of 
the  capitalists  of  Great  Britain,  at  the  close  of  the  Ger- 
man war,  for  the  payment  of  the  indemnity;  but  in  the 
course  of  two  or  three  years  her  obligations  were  pur- 
chased from  foreign  hands  by  the  French  people,  and 
to-day  the  national  debt  of  France,  large  as  it  is,  is  a 
home  debt.  It  has  not  been  extinguished,  or  even  di- 
minished, by  the  transfer,  but  by  being  held  by  French- 
men it  is  no  longer  a  drain  upon  her  resources.  The 
Government  of  the  United  States  has  made  no  foreign 
loan,  but  during  our  late  civil  war,  and  for  some  time 
after  its  close,  large  purchases  of  our  bonds  were  made 
by  foreigners.  Three  years  ago  not  less,  probably,  than 
$500,000,000  of  them  were  held  on  the  other  side  of  the 
Atlantic;  now  the  amount  held  by  foreigners  does  not 
exceed   *^2oo, 000,000.     Three  hundred   million    dollars 


235 

of  United  States  bonds,  which  three  3'ears  ago  were 
the  property  of  Europe,  are  now  owned  by  the  people  of 
the  United  States,  as  the  French  "'rentes"  are  owned 
by  the  people  of  France.  Nearly  all  nations  are  in  debt, 
rich  nations  to  their  own  people,  poor  ones  to  foreigners. 
The  debt  of  the  United  States  has  become  substantially 
a  home  debt;  and,  what  is  better,  it  has  been  largely 
reduced.  One  of  the  brightest  pages  of  our  history  is 
that  which  shows  how  the  reduction  of  our  great  war 
debt  was  commenced  in  less  than  a  year  after  the  war 
was  terminated;  how  its  reduction  was  continued  during 
a  period  of  great  business  depression  and  disaster,  and  is 
now  $1,000,000,000  less  than  it  was  in  September,  1865. 
Notwithstanding  the  mistakes  that  have  been  made, 
there  is  no  nation  which  has  so  creditable  a  record  of 
the  management  of  its  debt. 

Of  gold  and  silver  as  currency  merely  it  is  not  neces- 
sary for  me  to  speak.  Their  usefulness  in  this  respect 
is  well  understood;  on  this  point  opinions  agree;  of  their 
necessity  as  a  basis  of  bank-note  circulation  I  shall  speak 
in  another  lecture.  As  a  medium  of  exchange  they  are 
of  great  utility,  but  as  they  share  this  utilit}'  with  bank- 
notes, bills  of  exchange,  and  other  representatives  of 
value,  in  fact,  with  other  commodities,  I  do  not  dwell 
upon  them.  I  have  attempted  to  show  merely  in  this 
lecture — 

Firstly.  That  nothing  but  coinage  of  gold  and  silver 
can  properly  be  called  money. 

Secondly.  That  the  value  of  coins  depends  not  upon 
the  authority  of  the  Government  that  stamps  them  and 
gives  them  a  name,  but  upon  the  quantit}^  of  pure  metal 
which  they  contain.  Thus,  the  Government  of  the 
United  States  establishes  the  quantity  of  gold  and  silver 
wdiich  shall  be  contained  in  a  gold  and  silver  dollar. 
The  Government  of  Great  Britain,  the  French  Govern- 
ment, in  fact  all  governments,  adopt  the  same  rule  in 
regulating  their  coinage;  beyond  this  they  cannot  go. 

Thirdly.  That  gold  and  silver,  whether  coin  or  bul- 
lion, are  a  measure  of  value,  because  the}^  possess  value 
in  themselves.  There  can  be  no  absolute  or  unchang- 
ing measure,  but  gold  and  silver  come  nearer  to  it  than 
an3'thing  else,  because   the   supply   is  limited,  and  has 


^36 

never  been  found,  and  probably  never  will  be  found,  to 
exceed  the  healthy  demand  for  them  for  money  and  the 
arts.  Although  their  intrinsic  and  commercial  value, 
or  their  purchasing  power,  may  be  increased  or  dimin- 
ished by  such  causes  as  have  been  named,  yet,  as  their 
value  as  metals  is  substantially  uniform  throughout  the 
world,  the  increase  or  decrease  of  their  purchasing 
power  does  not  affect  them  as  a  measure  of  value.  Uni- 
formity and  universality  of  value  is  what  is  needed  in  a 
standard,  and  this  they  possess  in  an  eminent  degree. 

Fourthly.  That  they  are  of  great  importance  in  indi- 
cating the  course  of  international  trade,  and  are  an  ab- 
solute necessity  in  the   settlement  of  national  balances. 

When  these  truths  are  understood — and  they  ought 
to  be  understood  by  everybody — the  popular  delusion 
that  a  Government  can  make  money  by  promising  to 
pay  it,  and  the  monstrous  absurdity  involved  in  what  is 
called  fiat  money  and  a  non-exportable  currency  will 
have  no  advocates. 

There  is,  as  I  have  said,  a  higher  law  in  finance  as 
well  as  in  morals,  opposition  to  which  is  powerless;  the 
force  of  moral  law  is  exhibited  as  true  civilization  is  ex- 
tended over  the  globe;  it  was  especially  manifested  in 
the  United  States  in  the  evils  of  slavery  and  the  eman- 
cipation of  slaves.  Financial  law  was  violated  by  the 
Legal-Tender  Acts,  from  the  effects  of  which  the  coun- 
try has  suffered  severely  for  years,  and  will  continue  to 
suffer  until  they  are  repealed  or  declared  to  be  invalid. 
It  is  contended  that  money  is  man's  device,  and  that 
what  man  devises  man  can  change  or  discontinue;  but 
the  metals  of  which  it  consists  are  not  of  man's  crea- 
tion. They  are  limited  in  production;  they  are  not  sub- 
ject to  corrosion;  they  can  be  changed  from  articles  of 
domestic  use  into  money,  and  from  money  to  such  arti- 
cles again,  without  diminution  of  substance  or  value.  A 
pound  of  gold  or  silver,  no  matter  how  small  the  parti- 
cles of  which  it  is  composed,  is  worth  as  much  as  it 
would  be  if  it  were  a  solid  mass;  not  so  with  the  pre- 
cious stones,  which  depend  for  their  value  upon  their 
size.^  The  Koh-i-noor  of  the  British  crown,  of  almost 
inestimable  value  in  its  present  form,  would  be  compar- 
atively worthless  if  broken  into  quarters  or  even  into 


237 

halves.  Money  is  man's  device,  but  there  is  neces- 
sit\'  for  it  in  its  present  form,  and  this  necessity  will 
continue  as  long  as  society  exists.  Many  attempts  have 
been  tried  to  make  it  out  of  something  else  than  gold 
and  silver,  but  all  such  attempts  have  been  failures,  and 
generally  disastrous  failures. 

I  have  thus  spoken  of  gold  and  silver  as  possessing  in 
themselves  a  quality  which  best  fitted  them  for  a  uni- 
versal standard,  without  which  foreign  trade  would  be 
greatly  restricted  and  domestic  trade  would  be  unreli- 
able. I  repeat  what  I  have  said,  that  they  alone  are 
money.  If  this  limited  definition  had  Uq^u  adhered  to, 
I  am  quite  sure  that  most  of  the  vagaries  and  delusions 
which  have  been  soprevalent,  which  have  troubled,  and 
which  still  trouble,  many  of  our  countrx  men.  and  which 
it  is  now  so  difficult  to  explode,  would  never  have  ex- 
isted. By  the  more  general  definition  the  masses  have 
been  easily  persuaded  that  money  could  be  made  by  the 
printing  press;  that  whatever  the  Government  de- 
clares to  be  money  and  receives  as  such  is  money.  It 
is  in  part  owing  to  this  that  the  United  States  notes, 
greenbacks,  as  they  are  called,  have  been  so  deceptive 
and  still  are  so  dangerous.  I  do  not  say  that  the  legal- 
tender  quality  which  was  given  to  them  was  not  neces- 
sary for  the  accomplishment  of  the  object  for  which 
they  were  issued,  although  this  is  a  point  upon  which 
doubt  may  be  reasonably  entertained,  but  there  can  be 
no  question  that  the  law  which  created,  by  these  notes, 
a  depreciated  and  variable  standard  of  valiie,  was  pro- 
ductive of  great  mischief  and  that  it  will  continue  tobe 
mischievous  as  long  as  it  is  in  force.  It  was  a  violation 
of  a  financial  and  commercial  law  which  is  as  certain  as 
gravitation,  the  penalties  for  the  violation  of  which 
could  not  and  cannot  be  escaped. 

Fortunately  there  is  something  attractive  about  gold 
and  silver  in  their  independent  and  intrinsic  value.  Cir- 
culating notes  may  be  more  convenient,  but  they  lack 
the  qualities  which  make  gold  and  silver  precious. 
There  is  and  always  must  be  some  uncertainty  about 
them  to  lessen  their  attractiveness.  If  notes  are  issued 
by  a  Government,  their  value  depends  not  only  upon 
the  solvency  of  the   Government,  but  upon  its  honor; 


238 

issued  by  a  bank,  their  value  rests  upon  the  ability  of 
the  bank  to  redeem  them,  in  the  convertible  value  of 
the  securities  pledged  for  their  redemption. 

It  is  only  by  the  maintenance  of  this  distinction,  that 
the  subject  of  a  mixed  currency  can  be  properly  dis- 
cussed. Men  soon  forget  their  troubles,  and  it  is  for- 
tunate that  it  is  so,  but  the  causes  of  them  should  never 
be  forgotten.  It  is  not  pleasant  for  us  to  think  of  the 
disasters  which  came  upon  the  country  from  1873  to  1878, 
but  we  should  remember  that  these  disasters,  if  not  al- 
together the  result  of  a  new  and  vicious  standard  of  value 
established  by  the  Legal-Tender  Acts,  were  greatly  in- 
creased and  intensified  by  it.  The  legal-tender  notes 
were  popular  even  when  they  were  greatly  depreciated, 
because  they  advanced  prices  and  gave  to  the  country 
an  appearance  of  prosperity  which  was  as  seductive  as 
it  was  unreal.  They  are  popular  now,  because  they  are 
redeemable,  but  their  issue  was  a  violation  of  funda- 
mental law,  and  this  violation  is  none  the  less  existent, 
because  they  are  now  convertible  into  gold.  I  shall 
speak  more  fully  upon  these  notes  when  I  come  to  speak 
about  the  representatives  of  money.  I  would  here 
merely  note,  in  conclusion,  an  interesting  fact,  which  il- 
lustrates the  relations  which  commercial  nations  have  to 
each  other,  and  shows  how  legislation,  which  seems  to 
be  local,  becomes  extensive  in  its  influences.  The  very 
great  advance  of  prices  in  the  United  States  caused  by 
thelarge  issue  of  Government  notes  and  bank-notes  was 
followed  by  an  advance  of  prices  in  the  commercial 
countries  of  Europe,  produced  not  altogether  by  the 
necessary  demand  in  the  United  States  for  most  articles 
of  consumption  during  the  war,  and  the  unnecessary  de- 
mand for  many  articles  of  foreign  production  after  the 
war  was  over,  but  by  the  exportation  of  the  products  of 
our  gold  and  silver  mines,  for  which  there  was  no  use 
at  home  except  for  the  payment  of  duties  and  the  inter- 
est on  the  public  debt. 

Not  less  than  $300,000,000  of  gold  and  silver  went  to 
Europe,  chiefly  to  London,  between  1862  and  1877, 
which  would  not  have  gone  there  if  the  specie  standard 
had  alone  existed  in  the  United  States.  Thus  the 
amount  of  the  precious  metals  was  increased  in  Europe 


239 


by  our  disuse  of  them,  and  as  their  purchasing  power 
is  increased  by  their  scarcity  and  diminished  by  their 
abundance,  the  United  States  notes  were  a  disturbing 
element  abroad  as  well  as  at  home. 


Second  Lecture. 

BI-METAELIC    MONEY. 

Hitherto  I  have  spoken  of  coined  gold  and  silver  as 
constituting  what  might  be  called  a  joint  standard  or 
measure  of  value.  It  w^ill  be  seen,  however,  as  I  pro- 
ceed, that  it  is  impossible,  without  the  co-operation  of 
foreign  nations,  for  the  United  States  to  give  to  them 
for  any  considerable  period  a  proportionate  value  which 
would  enable  them  to  w^ork  harmoniously  together.  All 
efforts  to  accomplish  this  have  been  ineffectual.  They 
have  had  a  constant  tendency  to  push  each  other  out  of 
circulation.  Circumstances  have  been  constantly  oc- 
curring to  make  sometimes  the  one  and  sometimes  the 
other  more  valuable  abroad  than  at  home,  and  to  cause 
the  exportation  of  that  which  at  the  time  possessed  the 
greater  commercial  value.  This  variation  in  the  com- 
parative value  of  the  two  metals  has,  in  times  past, 
been  mainly  caused  by  the  difference  in  the  comparative 
production  of  the  gold  and  silver  mines.  Silver  as  com- 
pared with  gold  w^as  cheapened  by  the  large  yield  of  the 
silver  mines  of  Mexico  and  South  America;  gold  was 
cheapened  as  compared  with  silver  by  the  enormous 
production  of  the  gold  mines  of  California  and  Australia. 
The  present  depreciation  of  silver  is  attributable  partly 
to  increased  production,  but  mainly  to  a  combination  of 
causes  to  which  I  shall  allude  farther  on. 

Let  us  look  for  a  few  moments  at  some  of  the  efforts 
made  by  the  Government  of  the  United  States  to  give 
to  these  metals  a  comparative  equality  of  value. 

The  first  coinage  act,  passed  by  Congress  in  1792, 
fixed  the  ratio  which  silver  should  bear  to  gold  at  fif- 
teen of  the  former  to  one  of  the  latter.  In  other  words, 
fifteen  ounces  of  pure  silver  were  made  equal  to  an  ounce 
of  pure  gold,  the   eagle  to  contain  247)2  grains  of  pure 


240 


and  270  grains  of  standard  gold;  the  silver  dollar  to  be 
of  the  same  value  as  the  Spanish  dollar  then  in  circula- 
tion, and  to  contain  sji^4  grains  of  pure  and  416  grains 
of  standard  silver,  the  standard  being  the  weight  of  the 
coin  after  it  had  been  alloyed. 

The  ratio  of  fifteen  to  one  corresponded  at  the  time  with 
the  relative  value  of  the  two  metals  in  those  countries 
in  which  both  were  in  use.  It  was  soon  discovered, 
however,  that  this  ratio  was  not  an  equal  one,  that  an 
ounce  of  gold  was  worth  more,  would  purchase  more, 
in  those  countries  with  which  the  United  States  had 
commercial  intercourse,  than  fifteen  ounces  of  silver. 
Hence,  according  to  the  invariable  law,  by  the  opera- 
tion of  which  the  inferior  currency  forces  the  superior 
out  of  circulation,  gold  was  exported  and  silver  remained 
at  home.  Under  this  law  there  was  a  steady  outflow  of 
gold,  until  it  was  interrupted  by  the  act  of  1834,  which 
diminished  the  weight  of  eagles  from  247 ^^  grains  pure 
and  270  grains  standard  to  232  grains  pure  and  258 
standard. 

This  change  proved  to  be  too  radical;  silver  then  be- 
came comparatively  more  valuable  than  gold  and  an 
article  of  export,  as  gold  had  been  under  the  act  of 
1792.  Having  a  greater  purchasing  power  in  other 
countries  than  at  home,  silver  was  exported  until  it  be- 
came so  scarce  that  very  little  was  left  for  change.  B} 
the  act  of  1837  the  silver  dollar  was  reduced  in  standard 
weight  from  416  grains  to  41252.  This  reduction  in 
the  weight  checked,  but  did  not  stop,  the  exportation  of 
silver  dollars  which  continued  until  1853,  when  the 
coinage  of  dollars  was  discontinued,  and  a  decided  step 
taken  towards  a  single  standard.  By  the  act  of  Febru- 
ary 21,  1853,  while  the  dollar  was  not  demonetized  or 
reduced  in  weight,  half  dollars  were  reduced  from  206/4 
grains  to  192,  the  smaller  coins  in  the  same  proportion, 
and  their  legal  tender  quality  was  limited  to  five  dol- 
lars The  silver  dollar,  the  Dollar  of  the  Fathers,  as  it 
is  called,  thus  became  obsolete;  gold  became  practi- 
cally the  single  standard,  and  silver  a  subsidiary  cur- 
rency. Previous  to  the  passage  of  this  act  the  Govern- 
ment had  not  been  the  purchaser  of  bullion.  The  busi- 
ness of  the  mint   had    been  to  receive   such  bullion    or 


241 


foreign  coin,  whether  gold  or  silver,  as  might  be  brought 
to  it,  and  to  convert  the  same  into  coin  of  the  United 
States.  After  the  passage  of  this  act,  and  in  conformity 
with  its  provisions,  the  Government  purchased  all  the 
silver  used  for  coinage,  limiting  the  amount  to  the  re- 
quirements of  the  domestic  trade;  and  as  there  was  no 
demand  for  this  depreciated  coin  for  exportation,  it  con- 
tinued to  perform  the  office  of  a  subsidiary  currency  un- 
til it  was  driven  out  of  circulation  by  the  fractional  paper 
currency  of  the  Government. 

By  the  act  of  February  12,  1873,  the  legal  tender 
character  of  all  silver  coins  was  limited  to  ^5,  and  the 
silver  dollar,  like  the  fractions  thereof,  was  practically 
demonetized,  so  that,  had  it  not  been  for  the  United 
States  notes,  which  were  a  legal  tender  for  all  debts, 
public  or  private,  except  for  the  payment  of  duties  on 
imports  and  the  interest  on  the  public  debt,  there  would 
have  been  in  the  United  States  a  single  standard  only, 
and  that  the  gold  standard. 

By  the  act  of  February  28,  1878,  silver  dollars,  the 
coinage  of  wdiich  had  been  discontinued  after  the  pass- 
age of  the  act  of  1853,  and  which  had  been  deprived  of 
their  legal  tender  quality  for  any  sum  over  $5  by  the  act 
of  February  12,  1873,  were  again  made  legal  tender  at 
their  nominal  value  (their  real  value  at  412^2  grains  be- 
ing ten  per  cent,  less  than  their  nominal  value)  for  all 
debts,  public  or  private,  except  ^/here  there  was  a  con- 
tract for  the  payment  of  gold.  The  same  act  made  it 
the  duty  of  the  Secretary  of  the  Treasury  to  purchase 
silver  at  the  market  price,  not  less  than  tw^o  million  dol- 
lars' worth  and  not  more  than  four  million  dollars'  worth 
per  month,  and  to  cause  the  same  to  be  coined  monthly, 
as  fast  as  purchased,  into  dollars.  Up  to  the  passage  of 
this  act  it  had  been  the  policy  of  Congress  in  their  efforts 
to  maintain  a  double  standard  to  make  the  ratio  betw^een 
gold  and  silver  coins  as  nearly  equal  as  possible,  accord- 
ing to  the  commercial  value  of  the  two  metals.  This 
policy  was  then  reversed  and  a  dollar,  worth  commer- 
cially but  ninety  cents,  was  made,  so  far  as  the  law  could 
make  it  so,  the  equivalent  of  a  gold  dollar. 

Let  me  recapitulate.  The  first  coinage  act,  as  has 
been  stated,  made  the  ratio  of  silver  to  gold  as  fifteen  to 


242 


one,  that  being  the  ratio  in  Europe.  We  have  seen  that 
this  did  not  prove  to  be  an  equalizing  ratio;  an  ounce  of 
gold  proved  to  be  worth  more  than  fifteen  ounces  of 
silver  in  Europe,  and  the  gold  coins  went  where  they 
were  more  valuable  than  at  home. 

In  1834,  to  prevent  this  outflow  of  gold  and  to  equalize 
the  comparative  value  of  the  two  coins,  the  gold  standard 
was  degraded  between  six  and  seven  per  cent.,  the  stand- 
ard weight  of  the  eagle  being  reduced  from  270  grains 
to  258,  no  change  being  made  in  silver.  This  reduction 
in  the  value  of  the  eagle  increased  comparatively  the 
value  of  silver;  gold  became  the  inferior  currency,  and 
staid  at  home;  silver  the  superior  currency,  and  went 
abroad.  In  1837  the  silver  standard  was  again  changed, 
and  the  weight  of  a  silver  dollar  was  reduced  from  416 
grains  to  41 2)2  •  but  no  change  was  made  in  gold.  In  all 
the  coinage  acts  up  to  1S53  the  aim  of  Congress  was  to 
establish  a  standard  for  both  metals  similar  to  the  Eu- 
ropean standard;  to  make  the  relative  legal  value  of 
gold  and  silver  coins  correspond  with  the  commercial 
value  of  the  metals  out  of  which  they  were  coined. 
As  this  aim  of  Congress  had  not  been  accomplished, 
silver  coin  was  practically  demonetized  by  the  act  of 
February  21,  1853,  which  made  it  a  subsidiary  currency 
by  the  discontinuance  of  the  coinage  of  dollars  and  the 
degradation  of  halves  and  the  smaller  coins.  The  act 
of  1873,  of  which  so  much  complaint  has  been  made, 
as  an  act  by  which  the  silver  dollar  was  demonetized, 
was  in  fact  but  the  confirmation  of  the  act  of  1S53, 
which  put  a  stop  to  the  coinage  of  dollars  and  limited 
the  legal  tender  quality  of  half  dollars  and  the  fractions 
thereof  to  $5.  From  1853  to  1873  silver  dollars  had 
ceased  to  be  coined;  those  previously  coined  continued 
to  be  a  legal  tender,  but  there  were  so  few  of  them  in 
existence  that  the  passage  of  the  act  putting  them  on  a 
level  with  the  smaller  coins  was  a  matter  of  no  interest 
to  the  public.  If  any  wrong  was  done  to  silver,  it  was 
done  by  the  act  of  1853.  In  the  eftort  to  maintain  a 
double  standard  previous  to  the  act  of  1878,  Congress 
had  been  careful,  as  has  been  stated,  to  make  gold  and 
silver  coins  correspond  in  their  legal  value  with  their 
commercial  value.     By  this  act  a  wide  departure  was 


243 

made  in  the  established  policy  of  the  Government.  The 
fact  that  silver  was  declining  in  market  value,  that  at 
the  very  time  when  the  bill  was  under  consideration,  the 
silver  to  be  contained  in  the  dollar,  which  was  to  be  re- 
stored to  its  former  rank,  could  be  purchased  for  ninety 
cents,  was  utterly  ignored,  and  we  have  to-day,  as  silver 
has  continued  to  decline,  a  silver  dollar  worth  as  bullion 
84.76  cents,  but  yet  possessing  in  the  United  States  the 
legal  value  of  the  gold  dollar.  The  bill  which  put  no 
limitation,  except  the  monthly  coinage,  upon  the  amount 
that  might  be  coined,  and  made  the  ratio  between  silver 
and  gold  sixteen  to  one  instead  of  15^3,  which  was  the 
ratio  in  France  and  other  bi-metallic  countries,  was  hast- 
ily passed  under  the  influence  of  political  pressure.  Its 
passage  over  the  veto  of  the  President,  without  that 
consideration  which  courtesy  requires  to  be  given  to  his 
messages,  was  one  of  the  strangest  occurrences  in  the 
history  of  Federal  legislation.  So  far  the  act  has  done 
little  harm.  The  condition  of  the  foreign  exchanges, 
the  discretion  lodged  in  the  hands  of  the  Secretary, 
the  fact  that  the  Government  coins  only  its  own  silver, 
have  prevented  the  mischief  which  was  apprehended, 
and  may  prevent  serious  mischief  until  the  act  is  modi- 
fied by  such  a  limitation  of  the  coinage  as  will,  with 
the  retirement  of  the  small  notes,  raise  silver  to  a  parity 
with  gold. 

There  ought  not  to  be  any  doubt  that  this  law  will  be 
amended  before  silver  drives  gold  out  of  circulation,  and 
causes  its  exportation.  The  country  can  neither  afford 
to  lose  its  gold  nor  to  have  its  metallic  standard  of  value 
degraded.  The  careful  consideration  and  definite  set- 
tlement of  this  great  question  cannot  be  long  deferred 
with  safety.  There  should  be  no  uncertainty  as  to  what 
the  standard  is  to  be,  a  single  or  double  standard;  a  sin- 
gle standard  of  gold  or  of  silver,  or  a  double  standard 
of  gold  and  silver,  with  equal  proportional  value,  as  far 
as  their  value  can  be  equali:^ed.  This  is  one  of  the 
important  questions  now  before  the  country.  It  is  a 
question  which  troubles  other  nations  as  well  as  our  owm. 
tFpon  its  wise  settlement  great  interests  depend. 

I  have  already  spoken  of  the  changes  in  the  compara- 
tive legal  value  of  gold  and  silver  since  the  first  coinage 


244 


act  was  passed,  in  1792.  Let  us  look  at  the  value  of  sil- 
ver as  compared  with  that  of  gold,  taking  the  price  of 
silver  in  London,  and  estimating  the  weight  of  a  dollar 
at  412^^  grains,  and  going  back  no  farther  than  1857. 
Silver  at  the  price  of  581^3"';,  pence  per  ounce  makes  the 
silver  dollar  of  412J.2  grains  par  with  gold. 

Average  price  of  sii^ver  in  i^ondon. 


Year. 

p„_           Making 

Year. 

p_           Making 

1857     

Pence. 

6lf% 

62t^h 
61H 

mh 

617. 

Cents. 
104.69 
103.95 
105.^2 
104..58 
103.10 
104.16 
104.06 
104  06 
10:3.52 
103.63 
103.67      i 

Pence.               Cmfs. 
1868 fiOi                       1(1'  r.7 

\g^g                

18H9 

WVs                   102.47 
()()r"g       i             102  67 
60.A                     102.59 
60?B                   102  25 
m\                    100.46 
58335                    98.86 
56^                      96.43 
52?                      89.23 
541i|                    92.93 

1859 

2860          

1870 

:     1871 

1     1872 

1861 

1873 

18(>3             

1874 

1864 

1865 

1866  

1     1875 

1     I87(j     

1877 

1867  

i 

In  1078  silver  still  further  declined,  but  I  am  not  pre- 
pared to  give  the  exact  average  price. 

It  is  thus  seen  that  from  1857  to  1873  ^^^^  silver  dollar 
of  41 2 j^^  grains  was  worth  more  than  the  gold  dollar; 
that  for  six  years  it  exceeded  it  in  value  by  over  four 
per  cent.,  and  that  from  1857  it  was  at  no  time  worth 
less  until  1874.  The  decline  then  became  rapid,  the 
fall  being  from  100.46,  in  1873,  to  89.22,  in  1876.  In 
1877  it  advanced  to  92.93,  and  fell  off  in  1878  to  about 
86  cents.  At  the  present  time  a  silver  dollar,  according 
to  the  United  States  standard  weight,  is  worth,  as  has 
been  stated,  84.76  cents. 

For  seventeen  years,  during  the  period  referred  to, 
silver  was  more  valuable  than  gold;  for  five  years,  less 
valuable.  Its  present  depreciation  is  so  great  as  to  cre- 
ate anxiety  not  only  in  those  countries  in  which  it  is  the 
sole  standard,  or  the  standard  jointly  with  gold,  but  in 
the  two  countries  in  which  it  has  been  absolutely  de- 
monetized. The  serious  financial  question,  one  of  the 
most  serious  that  has  ever  been  forced  upon  the  consid- 
eration of  the  nations,  is.  How  shall  this  decline  be  ar^ 


245 


rested  so  that  silver  shall  not  cease  to  be  money  ?  It  is 
very  obvious  that  there  is  not  gold  enough  in  the  world 
for  circulation,  for  a  basis  for  circulating  notes  and  for 
the  settlement  of  international  balances,  without  such  an 
increase  in  its  value  as  would  reduce  the  price  of  every- 
thing measured  by  it  from  thirty  to  forty  per  cent. ,  while, 
at  the  same  time  the  burden  of  debt,  as  three-eighths  of 
the  specie  of  the  Western  nations  is  silver,  would  be  in- 
creased in  the  same  ratio.  The  universal  demonetiza- 
tion of  it  may  be  regarded,  therefore,  as  impracticable. 

It  could  not  be  demonetized  by  other  nations,  as  it  has 
been  by  Germany,  without  consequences  too  serious  to 
be  contemplated.  If  there  were  no  debts  to  be  paid  in 
a  currency  more  valuable  than  that  in  use  at  the  time 
they  were  contracted,  the  gold  standard  might  be  so  ele- 
vated as  to  make  gold  equal  to  the  wants  of  mankind, 
without  prejudice  to  anybody  or  any  interest  whatever, 
except  so  far  as  it  would  lessen  international  trade, 
which,  however,  to  the  people  of  the  United  States,  is  a 
very  important  consideration;  but,  as  the  world  is  cov- 
ered all  over  with  debts,  so  great  an  appreciation  of  the 
value  of  gold  as  that  which  would  result  from  the  gen- 
eral disuse  of  silver  would  be  overwhelmingly  disas- 
trous. 

As,  therefore,  there  is  not  gold  enough  or  likely  to  be 
enough  for  the  purposes  for  which  money  is  used,  one 
of  two  things  must  happen,  the  bi-metallic  standard 
must  either  be  adopted  by  all  nations  or  some  must 
adopt  the  single  standard  of  gold  and  others  the  single 
standard  of  silver,  in  which  event  rich  nations  would 
have  the  superior  metal  for  their  standard  and  poor  na- 
tions the  inferior  metal  for  theirs.  Which,  according  to 
any  proportionate  value  heretofore  established,  will  ulti- 
mately be  the  superior  and  which  the  inferior  depends 
upon  circumstances  that  can  not  be  foreseen.  It  has 
been  shown  that  for  a  long  period  silver  not  only  held 
its  own  with  gold,  but  that  it  has  been  more  frequently 
above  than  below  the  gold  standard.  Its  present  degra- 
dation is  attributable  to  a  combination  of  causes: 

Firstly,  to  the  unusual  production  of  the  silver  mines. 

Secondly,  to  the  demonetization  of  silver  by  the  great 
German  Empire,  and  the  limitation  put  upon  the  coin- 


246 


sige  of  it  by  the  Silver  Monetar}'  Union,  established  in 
1866  by  France,  Belgium,  Italy,  Switzerland,  and  Greece, 
which  limitation  was  at  first  agreed  upon  to  make  the 
silver  currency  uniform  and  to  prevent  its  exportation, 
and  has  been  continued  from  year  to  year  for  the  pur- 
pose of  checking  its  depreciation.* 

Thirdly,  to  the  duhiess  of  trade  in  India  and  to  the 
large  amount  payable  by  India  for  the  disbursements, 
amounting  to  some  $75,000,000  a  3'ear,  of  the  home  gov- 
ernment, which  have  checked  the  flow  of  silver  into 
that  great  silver  reservoir,  whither  silver  has  been  stead- 
ily flowing  since  commercial  intercourse  was  opened 
between  the  Oriential  and  Western  nations.  The  silver 
committee  of  the  House  of  Commons,  in  1876,  in- speak- 
ing of  the  depreciation  of  silver,  said: 

The  yearly  amount  payable  by  India  for  the  disbursements 
of  the  home  government  has  risen  since  the  Indian  mutiny  from 
5,000,000  to  15,000,000  pounds  sterlini^,  a  difference  of  which  the 
magnitude  will  be  appreciated,  when  it  is  remembered  that 
it  is  considerably  more  than  half  of  the  total  amount  of  silver 
annually  produced. 

Fourthly,  to  the  apprehension  that  other  nations  may 
follow  the  example  of  Germany  and  adopt  the  gold 
standard. 

All  of  these  causes  have  been  at  work  in  producing 
the  existing  degradation  of  silver,  and  perhaps  the  sur- 
prise ought  not  to  be  that  silver  has  been  degraded,  but 
that  the  degradation  has  not  been  greater.  Some  of  these 
causes  may  be  permanent,  but  it  is  obvious  that  most  of 
them  will  be  temporary.  It  is  true  that  for  some  years 
past  the  yield  of  the  .silver  mines  has  been  rapidly  gain- 
ing upon  that  of  the  gold  mines,  and  this  ma}'  continue 
to  be  the  case  for  some  3^ears,  but  there  is  no  certaint}^ 
of  it.  It  is  not  likely  that  there  will  be  gold  discoveries 
equal  to  those  made  in  California  and  Australia,  but  the 
gold  fields  of  California  and  Australia  have  not  been 
exhausted.      Hydraulic  mining  is  yet  in  its  infancy,  and 


*For  an  explanation  of  the  objects  for  w^hich  the  Latin 
Union  was  formed,  see  a  letter  in  the  New  York  Evening  Post 
of  the  29th  of  November  last  from  George  Walker,  one  of  the 
ablest  advocates  of  bi-metallic  money  in  this  countr}^  or  any 
other. 


247 


plentiful  stores  nia}-  yet  be  found  as  enterprise  pushe's 
its  way  into  regions  hitherto  but  partially  explored.  Be- 
sides, the  decline  in  the  prices  of  silver  must  inevitably 
tend  to  check  its  production.  There  are  many  mines 
which  could  be  profitably  worked  when  silver  was  worth 
fifty-nine  pence  per  ounce,  as  it  was  in  1873,  ^^^  which 
work  must  cease  if  the  present  low  prices  continue  to 
prevail.  If,  however,  there  be  good  ground  for  the  ap- 
prehension that  the  gold  supply  is  to  be  steadily  dimin- 
ishing, then,  unless  the  demand  for  metallic  money 
should  decrease  also,  which  is  not  probable,  the  imprac- 
ticability of  a  general  demonetization  of  silver  must  be 
obvious  to  everybody. 

Although  silver  has  been  legally  demonetized  in  Ger- 
many for  several  years,  the  work  necessary  to  establish 
practically  the  gold  standard  is  still  going  on.  Germany 
is  still  a  seller  of  silver  and  a  purchaser  of  gold.  No 
one  can  tell  how  much  of  the  former  she  has  yet  to  dis- 
pose of,  but  there  is  a  limit  to  her  disturbing  power  over 
the  money  markets  of  the  world.  This  limit  must  soon 
be  reached,  and  when  it  is  reached,  one  of  the  most 
powerful  causes  of  the  degradation  of  silver  will  disap- 
pear, for  her  experiment  in  the  demonetization  of  silver 
has  been  too  costly  to  be  imitated  voluntarily  by  other 
European  States.  It  would  not  have  been  attempted 
when  it  was,  had  it  not  been  for  the  French  indemnity 
which  was  paid  in  gold;  but  with  even  this  aid  to  the 
adoption  of  the  single  standard,  her  direct  loss  in  the 
sale  of  silver  has  been  very  large,  while  her  losses  by 
the  disturbances  of  business  and  the  unsettlement  of 
prices  have  been  still  larger.  She  has  paid,  she  is  still 
paying,  dearly  for  her  efforts  to  place  herself  alongside 
of  Great  Britain,  which  has  been  hitherto  the  only  na- 
tion in  the  world  in  which  the  single  gold  standard  has 
been  maintained.  The  great  German  statesman  is  not 
apt  to  make  mistakes  in  matters  affecting  German  inter- 
ests, but  a  great  mistake  was  made  (and  he  is  regarded 
as  being  responsible  for  it)  in  the  demonetization  of  sil- 
ver throughout  the  empire,  composed  as  it  is  of  States 
in  which  silver  had  been  almost  the  exclusive  currency. 
He  apparently  overestimated,  as  most  Germans  overes- 
timated, the  value  of  the  French  indemnity,  which,  iu 


248 


fact,  has  proved  to  be  the  reverse  of  enrichment  to  Ger- 
many. It  produced  a  fanaticism  of  speculation  in  many 
parts  of  that  country,  which  scarcely  had  a  counterpart 
in  the  United  States  in  our  period  of  speculative  mania. 
Germany  is  undoubtedh'  in  a  worse  financial  condition 
than  she  would  have  been  had  no  money  indemnity  been 
extorted  from  France. 

It  has  seemed  to  many  a  very  extraordinary  fact  that 
France,  crushed  by  the  Germans,  deprived  of  two  of 
her  valuable  provinces,  forced  to  pay  the  enormous  sum 
of  a  thousand  million  dollars  at  the  period  of  her  great- 
est humiliation,  was  nevertheless  in  two  years  after  the 
war  was  closed  much  more  prosperous  than  the  con- 
quering nation,  the  recipient  of  the  indemnity,  extended 
in  territor}^  and  consolidated  into  an  empire  which  in 
military  power  exceeds  anj-  other  nation  in  the  world. 
The  explanation  is  not  difficult. 

France  is  a  fertile  country  and  varied  in  its  produc- 
tions, and  her  lands  are  divided  among  6,000,000  of  her 
people.  Three-quarters  of  her  circulating  medium  are 
gold  and  silver,  of  which  she  holds  a  greater  amount 
than  any  Western  nation.  Her  people  are  tasteful,  in- 
dustrious, thrifty.  Rarely  aiming  to  become  suddenly 
rich,  they  are  not  speculative;  they  are  impulsive,  but 
prudent;  having  full  confidence  in  France,  no  matter 
how  governed,  they  hoard  their  earnings  until  they  can 
put  them  into  French  securities,  and  consequently  they 
never  suffer  b}'  making  deposits  in  unsafe  banks  and 
savings  institutions;  the  result  of  all  which  is  that 
France  is  rich,  notwithstanding  the  drain  upon  her  pop- 
ulation and  resources  by  the  destructive  wars  in  which 
she  has  been  engaged  from  the  commencement  of  her 
history. 

The  Germans  are  also  industrious  and  fairly  frugal, 
but  they  are  less  skilful  and  more  speculative  than  the 
French,  and  their  agricultural  products  are  less  varied 
and  valuable.  Germany  is  a  great  empire,  but  com- 
pared with  France  or  Great  Britain  or  the  United  States, 
she  is  poor,  and  the  radical  change  in  her  currency, 
which  was  commenced  in  1871  and  is  still  going  on,  has 
undoubtedly  been  the  cause  of  great  embarrassment  to 
her    people.     Her  experiment    in    demonetizing  silver 


249 


was  a  bold  one,  bolder  than  sagacious.  Great  Britain  is 
able  to  maintain  the  single  gold  standard  by  her  great 
wealth  and  her  supremacy  as  a  creditor  and  commercial 
nation.  Germany  has  no  such  monetar}-  or  commercial 
position,  and  the  difficulties  in  the  way  of  her  accom- 
plishing what  she  has  undertaken  are  daily  becoming 
more  and  more  manifest.  She  endeavors  to  retain  her 
gold  coinage  by  high  rates  of  interest,  in  which  she  is 
only  partially  successful,  while  these  high  rates  of  in- 
terest are  oppressing  her  debtors,  diminishing  her  foreign 
trade  and  affecting  injuriously  her  home  industries. 
Great  Britain  stands  alone  in  a  successful  effort  to  de- 
monetize silver,  but  even  she  has  not  been  uniform  in 
her  action. 

India  has  not  escaped  entirely  the  trouble  occasioned 
by  the  efforts  of  the  British  Government  to  change  her 
standard.  From  time  immemorial  gold  was  used  to 
some  extent  in  that  populous  countr}^  but  in  1852  so 
greatly  had  gold  declined  in  comparative  value  with 
silver  and  so  strong  was  the  apprehension  of  further 
decline  that  the  Government  refused  to  receive  it  at  the 
treasuries,  and  thus  practically  demonetized  it  in  India. 
During  the  late  civil  w^ar  in  the  United  States  the  cotton 
vSpinners  of  England  were  compelled  to  look  to  India 
for  a  large  part  of  their  cotton  supplies,  and  as  gold, 
having  been  demonetized,  could  not  be  used  there  with- 
out considerable  loss,  there  was  a  demand  on  their  part 
for  silver,  and  this  demand  became  at  last  so  great  as  to 
appreciate  it  throughout  Europe.  More  than  the  w^orld's 
annual  product  of  silver  between  1861  and  1S64  went  to 
India.  The  demonetization  of  gold  in  India  had  an  effect 
upon  European  markets  and  international  exchanges, 
like  that  produced  by  the  German  demonetization  of 
silver. 

The  panic — for  it  was  nothing  less — created  by  the 
w^onderful  yield  of  the  gold  mines  of  California  and  Aus- 
tralia caused  Holland  to  demonetize  gold,  and  induced 
Belgium  to  take  preliminary  measures  for  demonetizing 
it  also.  The  depreciation  of  silver  has  recently  caused 
both  nations  to  consider  the  expediency  of  the  demonet- 
ization of  that  metal,  but  it  is  quite  evident  that  the  ex- 
ample of  Germany   in   demonetizing  silver  wnll  not  be 


250 

followed  by  these  or  other  European  States  unless  they 
are  compelled  to  follow  it,  and  when  she  ceases  to  sell 
silver  one  of  the  chief  reasons  for  the  continuance  of 
the  agreement  between  the  Latin  nations  for  the  limita- 
tion of  silver  coinage  will  cease  also.  The  London 
Ecojwmist  \\\  1876  expressed  the  opinion  that  the  Latin 
Union  must  either  soon  coin  silver  without  limit  or  de- 
monetize it  altogether.  There  are  certainly  no  present 
indications  that  the  latter  will  be  attempted. 

Nor  is  the  falling  off  of  the  trade  between  the  Oriental 
and  Western  nations  likely  to  be  permanent;  on  the  con- 
trary, that  trade  is  quite  sure  to  revive  by  the  influence 
of  returning  prosperity  to  the  United  States,  which  is 
now  observable,  and  by  the  consequent  return  of  pros- 
perity to  other  commercial  countries.  So  closely  are 
nations  brought  together  in  these  days  of  steam  power 
and  electricity,  that  no  great  nation  can  be  in  trouble 
without  that  trouble  being  felt  by  other  nations;  nor  can 
any  nation  in  the  great  family  of  nations  be  for  any  con- 
siderable period  alone  prosperous.  As  the  terrible  dis- 
tress which  came  over  the  United  States  mainly  by  the 
war  and  over  issues  of  paper  money  affected  injuriously 
all  other  nations,  so  will  other  nations  feel  the  beneficial 
influences  of  a  revival  here. 

It  is  a  mistaken  notion  that  any  country  can  be  per- 
manently benefited  by  the  disasters  of  others;  on  the 
contrary,  there  is  a  community  of  interests  between 
nations,  no  matter  how  widely  separated  geographically 
or  by  diff"erences  in  their  governmental  institutions. 
Notwithstanding  the  jealousies  which  exist  between 
them,  the  political  antagonism  which  separates  them, 
and  the  ambition  which  Teads  them  to  struggle  for  supe- 
riority, there  is,  as  far  as  trade  is  concerned,  such  an  in- 
ternational brotherhood  thai  no  great  financial  depres- 
sion can  take  place  in  one  countr}-  without  other  coun- 
tries feeling  it  to  a  greater  or  lesser  extent.  The  disap- 
pearance of  the  causes  which  I  have  mentioned  will 
undoubtedly  not  only  check  the  decline  of  silver,  but 
give  to  it  an  upward  turn. 

What,  then,  should  be  the  action  of  the  United  States  ? 
Should  she  continue  the  double  standard  without  limit- 
ing the  coinage  of  silver,  notwithstanding  the  adoption 


251 

of  the  single  gold   standard   by  German3^  and  the  lim- 
ited   coinage   by    the   Latin   States?     This   she   cannot 
afford  to  do.     We  have   seen   that  there  is  a  tendency 
to  constant  fluctuations    in    the   relative    value  of    the 
two  metals;  that  the  cheaper  drives  the  dearer  out  of 
circulation.     These  fluctuations  will    continue   as  long 
as  silver  is  a  commodity  in  Great  Britain  and  Germany 
and  a  subsidiary  currency  in  the  Latin  Union  (for  such 
their  restriction   of   its  coinage    practically  makes  it); 
they  would  disappear  to  a  great  extent,  if  not  absolutely, 
if  bi-metallic  money  should  become  universal.     As  the 
great  producing  silver  country  of  the  world,  the  United 
States  has  a  very  decided  interest  in  the  value  of  silver, 
but  not   to  such   an  extent  as  to  compensate  for  the 
losses  which  must  be  sustained  by   a  separate  effort  to 
appreciate  it,  by  making  it,  without  a  limitation   of  the 
coinage,  a  joint  standard  with  gold.    We  cannot  without 
such  limitation,  or  the  co-operation  of  at  least  the  leading 
powers  in  Europe,  make  the   two  metals  comparatively 
equal  in  value.     One  or  the  other  will  go  abroad,  and 
that  one,  for  a  period,  no  one   can  tell  how  long,  will 
be    gold.     We    should    gain    nothing,    and    might   lose 
much,  by  independent  efforts  to  maintain   a  full  double 
standard.     We  should  not  only  run   the  risk  of  having 
no  more  money,  but  also  the  risk  of  having  less  in  value 
than  we  should  have  if  we  restricted  the  coinage  of  sil- 
ver.    In  the  proportion  which  silver  is  forced  into  cir- 
culation will  gold  go  out  of  circulation.     The  silver  act 
of  1878  would  be  a  practical  demonetisation  of  gold,  but 
for  the  very  favorable  condition  of  our  foreign  trade  and 
the   fact   that   the   Government  coins  no  silver  except 
what  it  owns,  and  leaves  a  large  discretion  in  the  hands 
of  the  Secretary  of  the  Treasury.     Under  the  existing 
policy  of  the  controlling  powers  of  Europe  the  nations 
of  the  world  must  be  divided,  as  has  been  said,  on  this 
great  question  into  two  classes:  those  which  adopt  the  gold 
standard  with  restrictions  upon  the  coinage  of  silver  and 
those  which  adhere  to   the  silver  standard  alone.     The 
United  States,  as  a  creditor  nation,  can  choose  her  own 
fellowship  and  position.     As  to  what  that  choice  will  be, 
the  respect  I  have  for  the  sagacity  of  my  own  country- 
men relieves  me  from  doubt. 


252 


But  under  existing  circumstances  I  think  it  perfect!}^ 
clear  that  the  United  States,  while  maintaining  the 
double  standard,  should  limit  the  amount  of  silver  to  be 
put  in  circulation,  so  as  to  prevent  it  from  depreciating; 
it  is  also  perfect!}^  clear  that  whatever  influence  she 
has  should  be  exerted  to  make  bi-metallic  money  the 
universal  money.  The  indications  are  very  decided 
that  all  Western  nations  will  be  eventually  forced  to 
adopt  the  double  standard.  As  long  as  they  are  divided 
in  policy  the  nations  that  practically  maintain  the  supe- 
rior standard  will  have  a  decided  advantage  in  commer- 
cial intercourse  over  those  nations  that  adhere  to  the  in- 
ferior one.  A  nation  which  is  compelled  to  pay  the 
balances  against  it  in  a  currency  superior  in  value  to  its 
own,  cannot  fail  to  be  the  loser.  The  international  com- 
merce of  the  w^orld  is  rapidly  growing.  It  has  been 
more  than  doubled  within  the  last  twenty  years,  and,  not- 
withstanding the  enormous  transactions  by  bills  of  ex- 
change, there  must  be  a  steadily  increasing  demand  for 
money.  Can  this  demand  be  satisfied  by  the  use  of  a 
single  metal,  or  can  it  be  satisfied  by  the  use  of  gold  by 
one  set  of  nations  and  the  use  of  silver  by  another  ? 
This  is  a  question  which  greatly  interests  all  nations 
and  divides  the  opinion  of  statesmen  and  economists. 
It  is  a  question  the  proper  decision  of  which  will  be 
aided  by  discussion,  but  it  will  be  eventually  decided 
by  national  necessities.  The  indications,  as  I  have  said, 
now  point  to  an  ultimate  decision  in  favor  of  bi-metallic 
money  without  restrictions  upon  the  coinage  of  silver; 
for  that  decision  the  United  States  can  afford  to  wait. 
But  while  as  a  creditor  nation  she  can  command  the 
best,  she  should  be  ready  to  join  other  nations  in  in- 
creasing the  metallic  currenc}^  of  the  world  b}^  giving  to 
silver  everywhere  the  character  of  money. 

The  interests  of  commerce,  the  grownng  fellowship 
between  nations,  the  result  of  increased  and  increasing 
facilities  of  intercommunication,  require  that  all  national 
barriers  should  be  removed.  The  difference  in  their 
respective  currencies  is  one  of  these  barriers. 

If  it  were  proper  for  me  to  advise  the  representatives 
of  the  people  in  Congress,  my  advice  would  be  that  all 
notes  less  than   five  dollars  should  within  one    year  be 


2.03 


withdrawn  from  circulation,  and  in  two  or  three  years 
the  five-dollar  notes  also;  that  the  coinage  of  not  only 
one-dollar  gold  pieces,  but  of  quarter  eagles,  should  be 
discontinued,  not  at  the  present  ratio  of  gold,  but  ac- 
cording to  the  ratio  adopted  by  other  bi-metallic  coun- 
tries, until  the  country  is  fully  supplied  with  a  local  sil- 
ver currency.  There  are  now  in  circulation  in  the 
United  States  upwards  of  two  hundred  millions  of  notes 
of  the  denomination  of  five  dollars  and  under.  As  these 
were  retired,  silver  coin  would  from  necessity  take  their 
place.  I  would  advise  that  the  coinage  of  silver  be  con- 
tinued as  long  as  silver  can  maintain  a  parity  with  gold. 
Small  notes  are  a  great  convenience,  but  the  convenience 
of  individuals  should  be  subordinate  to  the  public  good. 
As  long  as  they  remain  in  circulation  all  efforts  to  intro- 
duce silver  as  a  local  currency  will  be  abortive.  Notes 
are  not  money,  but  promises  to  pay  it — mere  evidences 
of  debt.  By  filling  the  country  with  the  precious  metals 
not  only  would  the  wealth  of  the  country  be  increased, 
but  the  danger  of  a  suspension  of  specie  payment,  which 
is  always  a  shock  to  credit  and  a  detriment  to  productive 
industry,  would  be  lessened,  if  not  absolutely  avoided. 
Nor  is  there  any  danger  of  a  superabundance  of  metallic 
money.  If  by  the  adoption  of  a  double  standard  and  an 
increase  in  the  productions  of  the  mines  there  should 
be  an  excess,  and  the  rates  of  interest  should  be  les- 
sened, lenders  would  be  the  losers,  but  borrowers  would 
be  the  gainers,  and  they  are  not  only  a  majority,  but 
they  are  the  most  enterprising  and  useful  men  in  all 
communities.  There  is.  however,  no  danger  of  such  an 
excess.  The  need  of  money  increases  with  the  growing 
demands  of  commerce,  and  every  dollar  which  is  taken 
from  the  mines  costs  its  value  in  the  labor  expended  in 
obtaining  it. 

I  would  also  advise  that  the  Secretary  of  State  open  at 
once  a  correspondence  with  the  leading  European  States, 
through  our  representatives  in  those  States,  for  the  pur- 
pose of  effecting,  by  treaty,  a  combination  for  the  general 
use  of  bi-metallic  money,  at  such  a  comparative  ratio  as 
might  be  agreed  upon.  If  our  distinguished  premier, 
Mr.  Bvarts,  taking  the  lead  in  the  negotiation,  should 
succeed  in  bringing  about  a  settlement  of  this  very  im- 


254 


portant  and  troublesome  international  question,  he  would 
acquire  a  world-wide  reputation  in  comparison  with 
which  his  triumphs  at  the  bar  and  in  the  council  cham- 
ber would  be  insignificant. 

The  alarm  over  what  is  called  the  excessive  produc- 
tion of  silver  in  the  United  States  is  groundless.  Since 
1848  the  gold  product  of  the  countr}-  had  amounted  at 
the  end  of  last  year  to  $1,462,825,000^  while  the  silver 
product  had  only  come  up  to  $379,450,000. 

Mr.  Gladstone,  in  a  letter  to  the  Secretary  of  the 
Bullion  Club  of  New  York,  under  the  date  of  the  3d 
of  March  last,  said:  "  Debts  ought  to  be  paid  in  a 
not  less,  valuable  medium  than  that  in  which  they  were 
contracted."  This  is  unquestionably  true.  Contracts, 
and  especially  those  for  the  enforcement  of  which  no 
legal  power  exists,  as  is  the  case  with  regard  to  the  debts 
of  sovereign  States,  should  be  fulfilled,  not  only  accord- 
ing to  the  letter  of  the  law,  but  according  to  the  under- 
standing between  the  contracting  parties.  The  bonds 
of  the  United  States  were  sold  when  gold  was  practically 
the  standard,  and  with  the  understanding  between  the 
Government  and  the  purchasers,  confirmed  since  by  law, 
that  the}^  would  be  paid  in  gold.  These  bonds  could 
not,  therefore,  be  called  in  and  redeemed  in  a  less  val- 
uable currency  than  gold  without  a  violation  of  a  con- 
tract and  national  dishonor.  The  same  is  true  in  regard 
to  the  debt  of  Great  Britain.  Although  most  of  it  was 
contracted  when  the  double  standard  existed,  it  has,  b}^ 
the  adoption  of  the  single  standard,  been  recognised  and 
treated  for  so  many  years  as  a  debt  payable  in  gold  that 
the  payment  of  the  interest  (the  payment  of  the  princi- 
pal is  not  even  contemplated  as  among  possibilities)  by 
the  British  Government  in  anything  less  valuable  than 
gold  would  put  an  indellible  stain  upon  her  character 
and  be  a  death  blow  to  her  financial  prestige.  The 
French  debt,  on  the  other  hand,  was  contracted  when 
the  double  standard  existed  in  France,  and,  as  it  still 
exists  there,  this  debt  could  be  paid  either  in  gold  or 
silver  without  a  violation  of  contract  or  national  dis- 
credit. France,  however,  so  preserves  the  parity  of  the 
two  metals  that,  although  probably  five  or  six  hundred 
of  the  thirteen  hundred  millions  of  money  in  her  bank 


255 


and  among  the  people  is  silver,  no  loss  is  sustained  by 
the  payment  of  the  interest  upon  her  debt  in  gold.  Prac- 
tically, however,  the  interest  upon  the  British  debt  is 
paid  in  a  medium  of  far  less  value  than  that  in  which 
the  debt  was  contracted.  It  is  paid  in  gold,  but  gold  has 
very  much  less  purchasing  power  than  it  had  when  the 
debt  came  into  existence.  The  burden  of  the  British  debt 
has  been  greatly  reduced  by  the  depreciation  of  gold, 
resulting  from  increased  production.  The  gold  discov- 
eries of  California  and  Australia  have  been  a  God  send 
to  the  British  Government  and  the  British  tax-payers; 
what  they  have  been  to  the  holders  of  British  securities 
is  a  different  thing  altogether.  This  diminution  of  the 
value  of  gold  has  been  the  result  of  natural  causes,  but 
the  effect  is  the  same  upon  the  holders  of  consols  as  it 
would  be  if  the  depreciation  had  been  produced  by  an 
act  of  Parliament. 

Mr,  Gladstone,  however,  went  on  to  say  that  "  the 
double  standard  is  not  in  strictness  any  standard  at  all." 
This  might  be  true  if  the  word  "standard"  was  used 
in  the  same  sense  in  regard  to  money  that  it  is  when 
used  in  regard  to  weights  and  measures.  I  wish  the 
distinguished  political  economist,  Mr.  Dunbar,  would 
take  it  upon  himself  (no  one  is  certainly  more  compe- 
tent) to  introduce  a  substitute  for  the  word  "standard." 
which  would  more  properly  define  its  meaning  when 
applied  to  the  precious  metals.  The  yard  stick  and  the 
pound  weight  are  merely  the  instruments  by  which 
qualities  are  determined,  and  they  must  be  maintained 
with  exactness;  they  have  no  other  use  or  value.  Gold 
and  silver,  on  the  other  hand,  are  valuable  in  them- 
selves as  well  as  by  being  standards.  The  double  stand- 
ard, or  what  is  the  same  thing,  the  alternative  standard, 
is  in  strictness  the  money  standard  in  France,  in  Bel- 
gium, and  now  also  in  Holland.  What  the  interests  of 
commercial  nations  demand  is,  that  there  should  be  in- 
ternational accord  in  regard  to  their  comparative  value. 
Prior  to  the  gold  discoveries  in  California  and  Australia, 
the  currency  of  France  was  almost  exclusively  silver. 
As  a  result  of  these  discoveries,  gold  declined  and 
silver  advanced  in  comparative  value.  France,  there- 
fore, sold  large   amounts   of  silver  at  a  premium  and 


256 


bought  gold.  She  could  not  have  done  this  had  it  not 
been  for  the  fact  that  the  large  productions  of  the  gold 
mines  of  California  and  Australia  created  a  gold  panic 
which  would  not  have  existed  had  gold  been  in  general 
use  throughout  the  European  nations.  Had  it  been  in 
such  use,  the  gold,  which  was  for  a  time  produced  in 
unusual  quantities,  would  have  been  quietly  absorbed 
without  depreciation  or  financial  disturbance.  It  was 
the  depreciation  of  gold  that  caused  Great  Britain  to 
demonetize  it  in  India,  the  result  of  which  was,  as  has 
been  shown,  that  during  the  civil  war  in  the  United 
States,  when  the  British  cotton  spinners  were  looking 
to  India  for  cotton  supplies,  there  was  a  demand  for  sil- 
ver for  the  purchase  of  India  cotton,  which  caused  not 
only  a  great  disturbance  of  the  trade  of  Great  Britain, 
but  unnatural  changes  in  the  comparative  value  of  the 
two  metals  throughout  the  commercial  world.  If  the 
policy  of  Great  Britain  in  regard  to  the  use  of  gold  in 
India  had  not  been  changed;  if  gold  as  well  as  silver 
could  have  been  used  in  the  purchase  of  India  cotton, 
British  trade  would  not  have  suffered  and  the  money 
markets  of  Europe  would  not  have  been  disturbed  by 
the  appreciation  of  silver. 

The  production  of  silver  in  the  United  States  has  been 
for  some  years,  and  is  likel}^  to  continue  to  be  for  some 
years  to  come,  very  large;  but  the  unusual  production  of 
silver  in  the  United  States  would  not  have  depreciated 
silver  to  any  considerable  extent,  and  would  not  con- 
tinue to  depreciate  it,  if  German}^  had  not  demonetized 
it  and  were  not  still  a  seller.  It  has  not  been  the  pro- 
duction of  our  silver  mines,  but  the  sales  that  have  been 
made  by  Germany,  and  those  which  she  must  continue 
to  make  in  order  to  establish  the  gold  standard,  the  un- 
known quantity  which  she  has  yet  to  dispose  of,  that 
has  been  and  still  is  so  potent  in  producing  the  depre- 
ciation of  silver.  Great  Britain  alone,  as  has  been 
stated,  has  successfully  adopted  and  maintained  the  sin- 
gle gold  standard.  Germany  has  adopted  it,  but  her 
ability  to  maintain  it  is  still,  at  least,  questionable;  nor 
is  it  by  any  means  certain  that  Great  Britain  has  been 
the  gainer  by  the  adoption  of  the  single  standard.  In 
order  to  prevent  her  gold  reserve  from  going  below  the 


257 


point  of  safety,  the  Bank  of  England  has  been  con- 
stantly under  the  necessity  of  changing  her  rates  of  in- 
terest. There  have  been  years  when  these  changes 
have  been  made  almost  every  month,  to  the  prejudice 
of  British  interests.  There  have  been  times  when  the 
arrival  of  gold  shipments  from  Australia  have  been 
looked  for  with  anxiety,  when  the  loss  of  the  gold  on  a 
single  steamer  would  have  produced  a  panic  in  London. 
The  large  receipts  of  gold  from  the  United  States  in 
1866  (the  Government  having  sold  some  thirty  millions 
in  a  single  day),  the  most  of  which  went  to  England, 
saved  the  bank  from  suspension.  What  would  have 
been  her  condition  if  gold  had  come  to  the  United 
States,  instead  of  bonds,  within  the  last  two  years,  it  is 
not  difficult  to  conceive. 

Against  the  opinion  of  Mr.  Gladstone,  that  "in  strict- 
ness the  double  standard  is  no  standard  at  all,"  let  me 
place  the  opinion  of  a  still  wiser  statesman.  Alexander 
Hamilton,  in  his  report  of  1792,  said:  "Upon  the  whole, 
it  seems  to  me  most  desirable  not  to  attach  the  unit  ex- 
clusively to  either  metal,  because  this  cannot  be  done 
effectually  without  destroying  the  character  of  one  of 
them  as  money,  and  so  reduce  it  to  the  character  of 
mere  merchandise.  To  annul  the  use  of  either  of  the 
metals  as  money  is  to  abridge  the  quantity  of  circulating 
medium,  and  is  liable  to  all  the  objections  which  arise 
from  the  comparison  of  the  benefits  of  a  full  with  the 
evils  of  a  scanty  circulation." 

One  of  the  most  common  objections  to  the  double 
standard  is  the  impossibility  of  preventing  fluctuations 
in  the  comparative  value  of  the  two  metals.  It  is  con- 
tended that  the  nation  that  uses  both  as  a  standard  in- 
curs a  double  risk  of  losing,  at  one  time  by  the  depre- 
ciation of  gold,  at  another  time  by  the  depreciation  of 
silver;  that,  as  the  double  standard  is  only  an  alternative 
standard,  it  must  lose  gold  when  gold  becomes  compara- 
tively more  valuable  than  silver  and  lose  silver  when 
silver  becomes  more  valuable  than  gold;  that  a  nation 
which  uses  but  one  standard  is  subject  to  but  one  of 
these  controlling  influences  instead  of  two.  But  are  not 
these  fluctuations  attributable  to  the  fact  that  gold  and 
silver  are  commodities  in  some  nations  and   money  in 


258 

others?  If  both  were  money,  and  of  the  same  com- 
parative value  in  all  nations,  would  not  the  fluctuations 
and  the  risk  be  reduced  to  a  minimum?  Might  they  not 
disappear  altogether?  If  the  gold  and  silver  now  in 
use  by  commercial  nations  were  subject  to  the  same  in- 
fluences, would  there  not  be  a  greater  steadiness  in  their 
own  value  and  in  the  value  of  all  commodities  measured 
by  them  than  is  now  possible  ? 

The  certain  preventive  of  fluctuations  in  the  compara- 
tive value  of  the  two  metals  will  be  found  in  the  diffu- 
sion of  both  throughout  the  globe,  and  this  diffusion  de- 
pends upon  their  becoming  a  joint  standard  of  value. 

I  have  thus  glanced  at  a  very  important  and  interest- 
ing subject;  a  proper  discussion  of  it  would  far  exceed 
the  limits  of  a  lecture.     It  may  be  proper  for  me  to  say 
in   conclusion  that  without  having  given  to  the  subject 
of  bi-metallic  money  the  careful  consideration  which  it 
merited,  I  had  publicly,  in  various  ways,  expressed  ^  the 
opinion  that  the  world  had  outgrown   the  need  of  silver 
as  money;  but,  as  others  thought  differently,  I  felt  it  to 
be  my  duty  in  the  preparation  of   this  lecture— a   duty 
which  I  owe  to  those  who  might  listen  to  me  and    to 
myself— to  consider  the  subject   fairly  and  to  go  where 
my  convictions   might  lead  me,  regardless  of  any  opin- 
ions I  might  have  formed    and  expressed.     At  the   out- 
set I  was  met  by  the  fact  that  the  circulation  of  the  Ori- 
ental nations  is  almost  exclusively  silver;  that  more  than 
one-third  of  the  money  of  the  Western  nations  is  silver 
also.     This  fact,  together  with  the  probability  that  such 
nations  as  Russia  and  Italy,  in  which  depreciated  paper 
is  chiefly  in    use,  and  the    South   American    States,   in 
which  metallic  money  is  unknown,  would   at  no  distant 
day  adopt  a  specie  standard,  led  me  to  revise  my  opin- 
ions, the  result  of  which  was  the  conclusion  that  the  uni- 
versal demonetization  of  silver  would  be  absolutely  im- 
practicable, and  that  international  trade  would  be  facili- 
tated  and   increased,   and    the    progress   of  civilization 
would  be  advanced  by  the  use,  by  all  nations,  of  bi-me- 
tallic  money.     It  is  not  a  pleasant  thing  for    me  to    be 
compelled    to   acknowledge   thus  publicly   a  change  of 
opinion  upon   a   very  important  subject,  but   I  console 
myself  with  the  reflection  that  there  is  no  merit  in  mere 


259 


consistency;  that  it  is  much  better  to  be  right  than  to  be 
consistent.  But  while  I  think  that  bi-metallic  money 
ought  to  be,  and  that  it  will  eventually  become,  the  uni- 
versal money,  I  regard  the  act  of  1878  as  being  a  grand 
mistake.  Nothing,  it  seems  to  me,  can  be  more  unwise 
on  the  part  of  those  who  desire,  as  I  do,  that  there 
should  be  an  abundance  of  real  money  in  the  United 
States,  than  the  effort  which  they  are  making  to  in- 
crease the  supply  by  a  full  remonetization  of  silver  with- 
out regard  to  the  action  of  other  commercial  States.  To 
the  extent  that  silver,  in  a  ratio  that  renders  it  less  val- 
uable than  gold,  is  forced  into  circulation,  will  gold  go 
out  of  circulation.  What  we  are  to  gain  by  substituting 
silver  for  gold,  the  at  present  inferior  for  the  superior 
metal,  I  anl  unable  to  perceive.  We  have  seen  that 
gold  and  silver  will  not  circulate  together  unless  there 
is  a  parit}^  of  commercial  value  betw^een  them,  and  noth- 
ing is  more  certain  than  that  this  parity,  with  no  restric- 
tions upon  the  coinage  of  silver,  cannot  be  maintained 
in  the  United  vStates  without  the  co-operation  of  the 
leading  nations  of  Europe. 

Our  recent  silver  commission  was  a  failure,  because 
the  act  of  1878  fixed  the  relative  value  of  silver  to  gold 
at  sixteen  to  one,  while  the  ratio  of  the  Latin  Union 
was  i5>^  to  one.  Having  no  silver  in  circulation  excejJt 
as  a  subsidiary  currency,  we  adopted  a  standard  differ- 
ing materially  from  that  of  the  bi-metallic  States,  which 
have  a  circulation  of  many  millions,  and  then  invited 
them  to  a  conference.  The  failure  of  a  conference 
under  such  circumstances  it  required  no  spirit  of  proph- 
ecy to  predict. 


Third    Lkcture. 

THE  re;prEvSEntatives  of  money. 

In  my  second  lecture,  I  spoke  of  gold  and  silver,  and 
especially  of  their  comparative  value.  The  conclusion 
reached  was,  that  not  only  are  both  needed  as  a  circu- 
lating medium  and  measure  of  value,  but  that  all  nations, 
at  least  aU  Western  nations,  will   eventually  be  com- 


260 

pelled  to  adopt  the  double  standard.  The  apprehension 
that  the  depreciation  of  silver  will  increase,  or  even  con- 
tinue for  any  considerable  time,  has,  in  m}^  judgment, 
no  better  foundation  than  that  which  existed  in  1852  in 
regard  to  the  depreciation  of  gold.  The  difference  in 
the  yield  of  gold  and  silver  mines  and  other  causes  have 
conspired  in  the  past,  and  may  conspire  in  the  future,  to 
give  to  the  two  metals,  sometimes  to  the  one,  sometimes 
to  the  other,  superior  value;  but  in  all  probability  this 
superiority  will  be  only  temporary;  it  certainly  will  be 
when  both  are  used  as  money  by  all  the  leading  com- 
mercial nations.  The  wisdom  which  made  both  a  meas- 
ure of  value  and  established  between  them  comparative 
relations  is  vindicated  by  their  history.  While  their 
comparative  commercial  value  has  been  subject  to  fluc- 
tuations and  can  never  be  absolutely  fixed  by  human 
law,  a  higher  law  has  heretofore  prevented,  and  will  con- 
tinue to  prevent,  these  fluctuations  from  becoming  so 
great  as  to  offset  the  advantages  derived  from  the  use  of 
both — the  law  of  comparative  supply.  The  relations  be- 
tween them  have  been  practically  established  by  the 
cost  in  labor  of  obtaining  them,  and  this  cost,  which  is 
always  a  regulator  of  supply,  is  no  more  likely  to  be 
seriously  disturbed  in  the  future  than  it  has  been  in  the 
past.  We  may,  I  think,  safely  discard  all  apprehension 
that  either  will  be  so  cheapened  as  to  render  it  unfit 
for  the  purpose  for  which  it  is  being  used. 

I  come  now  to  speak  of  the  representatives  of  money 
which  have  been  and  are  in  use  in  the  United  States  in 
the  form  of  paper  obligations,  and  I  would  remark  at 
the  outset  of  this  discussion,  that  while  a  paper  cur- 
rency may  be  a  beneficial  supplement  to  metallic  money, 
it  can  never  with  safety  be  a  substitute  for  it.  Of  the 
great  convenience  of  a  paper  currency  there  can  be  no 
question.  It  is  less  burdensome,  less  expensive  in  trans- 
portation, and  to  some  extent  better  fitted  for  domestic 
transactions  than  either  gold  or  silver.  Nor  is  it  with- 
out its  benefits  in  encouraging  industry,  quickening 
enterprise,  and  reducing  the  rate  of  interest  by  the  ad- 
dition it  makes  to  the  circulating  medium;  but  in  order 
that  it  may  be  productive  of  good  rather  than  of  evil, 
it  must  be  worth  what  it  is  intended   to  represent,  and 


201 


this  it  never  has  been  and  never  will  be  unless  its  volume 
is  judiciously  restricted. 

It  would  be  interesting  and  instructive  to  trace  the 
history  of  paper  currenc}'  in  other  countries,  but  it  will 
be  sufficient  for  me,  perhaps,  to  refer  to  it  briefly  in  our 
own.  Massachusetts,  as  she  is  quite  apt  to  do  in  all 
new  enterprises,  took  the  lead  in  the  use  of  paper  cur- 
rency. In  the  good  old  colony  time  of  1690  she  began 
the  issue  of  Treasury  notes,  which  were  made  receiv- 
able for  taxes  and  a  legal  tender  in  all  domestic  trans- 
actions. There  was  a  seeming  necessity  for  this  action 
on  her  part,  for  then  no  mines  had  been  opened,  no  dis- 
coveries of  precious  metals  had  been  made  on  this  side 
of  the  Atlantic,  except  in  Mexico  and  the  South  Ameri- 
can States,  which  w^ere  under  the  domination  of  Portu- 
gal and  Spain.  Other  colonies  followed  her  example 
and  issued  notes,  some  in  one  form  and  some  in  another, 
and  so  imprudently  that  they  rapidly  depreciated,  not- 
withstanding the  laws  that  made  them  lawful  money  and 
a  legal  tender.  In  1749  Massachusetts  discontinued  the 
policy  of  making  money  by  promising  to  pay  it,  but  in 
this  instance  her  example  was  not  followed  by  her  sister 
colonies  which  continued  to  issue  depreciated  notes  un- 
til they  were  prevented  by  an  act  of  Parliament  which 
prohibited  all  British  colonies  from  issuing  bills  of  credit, 
and  silver  became  the  exclusive  currency. 

At  the  commencement  of  the  Revolutionary  War, 
there  being  an  unusual  demand  for  currency,  Massachu- 
setts again  resorted  to  the  printing  press,  in  which  she 
was  imitated  by  the  Continental  Congress,  which  ini- 
tiated its  financial  work  by  the  issue  of  two  millions  of 
irredeemable  notes,  which  issue  w^as  followed  step  by 
step,  the  continued  depreciation  creating  a  necessity  for 
increased  issues  until  the  whole  of  it,  some  two  hun- 
dred millions,  in  addition  to  the  colonial  notes — uncer- 
tain in  amount — became  absolutely  w^orthless.  Every- 
body knows  the  history  of  what  was  called  the  Conti- 
nental money — how  the  notes  depreciated  after  twenty 
millions  had  been  issued,  how  every  additional  issue  in- 
creased the  depreciation — until  they  became  a  synonym 
for  worthlessness,  so  that  the  slang  expression  "not 
worth  a  continental  "  has  been  the  most  significant  de- 


262 

scription  of  things  absolutely  destitute  of  value.  And 
yet  it  is  hardly  fair  that  reproach  should  be  cast  upon 
Continental  notes.  Although  they  became  as  worthless 
as  waste  paper,  and  by  their  large  volume  excited  a 
spirit  of  speculation,  of  which  that  of  a  recent  date  was 
hardly  a  counterpart,  they  answered  the  main  purpose 
for  which  they  were  issued.  They  were  serviceable 
during  the  greater  part  of  the  Revolutionary  War.  Per- 
haps it  is  not  too  much  to  say  that  without  them  the 
war  could  not  have  been  maintained;  that  to  Continental 
notes  are  we  indebted  for  our  national  independence. 

At  the  close  of  the  war  the  colonies  were  in  a  most 
wretched  condition,  without  money,  without  credit, 
without  union.  They  had  achieved  their  independence, 
but  at  the  most  tremendous  sacrifice;  they  had,  in  fact, 
nothing  to  boast  of  but  their  liberation  from  the  mother 
country.  A  government  was  to  be  formed  to  bind  them 
together  as  a  nation;  credit  was  to  be  built  up;  a  reve- 
nue system  was  to  be  established.  Fortunately  for  the 
world,  the  men  upon  whom  these  great  duties  rested  were 
equal  to  the  emergency;  fortunately,  also,  when  the 
new  government  was  formed,  and  a  more  perfect  Union 
secured,  a  man  appeared  (Alexander  Hamilton)  to  take 
charge  of  the  financial  interests  of  the  Government, 
whose  equal  as  a  financial  minister  has  rarely,  if  ever, 
been  found.  Not  inferior  to  Necker  in  clearness  of  in- 
tellect, comprehensiveness  of  views,  and  stability  of 
purpose,  he  was  superior  to  Necker  in  his  knowledge  of 
detail  and  his  power  of  organization.  He'not  only  de- 
vised the  means  for  establishing  on  a  firm  basis  the  na- 
tional credit,  and  giving  new  life  to  industry  and  well- 
directed  enterprise,  but  he  organized  the  Treasury  De- 
partment with  such  perfection  of  skill  that  nothing  has 
been  required  by  the  enormous  increase  of  its  business 
but  the  expansion  of  the  system  which  he  put  in  opera- 
tion. When  I  read  Mr.  Hamilton's  reports  of  1790  and 
1 791  upon  the  public  credit,  a  national  bank  and  manu- 
factures, I  am  amazed  at  the  breadth  of  knowledge  dis- 
played by  one  whose  opportunities  for  acquiring  infor- 
mation upon  these  great  questions  had  been  so  limited; 
when  I  look  at  the  admirable  machinery  of  the  Treas- 
ury Department  I  am  almost  equally  amazed  by  his  skill 
as  an  organizer. 


263 

Before  the  close  of  the  war  Congress,  upon   the  red- 
ommendation  of  Robert  Morris,  the  Continential   finan- 
cier, had  authorized  the  establishment  at  Philadelphia, 
under  the  name  of  the  Bank  of  North  America,  a  bank^ 
which  went  into  operation  on  the    ist  of  January,  1782, 
with  a  capital   of  $400,000,  two  thirds   of  which  were 
furnished  by  the  general   Government.     Such   was  the 
commencement  of  a  banking  system  which  has  grown 
to  such   immense  proportions.     This  bank  still  exists, 
and  is  distinguished  alike  by  its   age   and   its  prudent 
management.     Its  notes  were  the  first  paper  promises 
ever  put  into  circulation  this  side  of  the  Atlantic  that  were 
convertible  into  coin.     At  the  outset  so  strong  was  the 
prejudice  against  a  paper  currency  that  they  were  re- 
garded with  distrust,  but  the  prudence  with  which  they 
were    issued    and    their    convertibility    into   coin    soon 
brought  them  into  favor.     Then,  as  is  always  the  case, 
very  few  persons  wanted  specie  w^hen  sure  of  being  able 
to  obtain  it.     The  stock  of  the  bank  was  found  to  be  s-o 
good  an  investment  that  it  was  soon  increased  from  four 
hundred    thousand   dollars    to  two  millions  of   dollars. 
Some  two  years  after  this  bank  went  into  operation  the 
Bank  of  Massachusetts  was   organized  in   Boston,  and 
the  Bank  of  New  York  in  the  city  of  New  York.     Both 
of  these   institutions  still  exist  and  have  had  a  prosper- 
ous and  honorable  career.     These  were  the  only  banks 
of  issue  when  Mr.  Hamilton   entered    upon    his  duties 
under  the  new  Constitution  as  Secretary  of  the  Treasury. 
In  the  disordered  condition  of   the  national  finances  the 
establishment  of  a  national  bank  was  a   national  neces- 
sity, and   the  wisdom  of  Mr.   Hamilton  in  devising  the 
scheme  was  proved  by  its  history.     It  was  organized  in 
1 791;  as  a  national  institution  it  superseded  the  Bank  of 
North  America,  and  by  its  large  capital,  ten  millions  of 
dollars  (at  that   time  a  very  large  sum),  and   by  its  ex- 
cellent management  it  aided  materially  in  building   up 
the  credit  of  the  Government  and  giving  to  the  business 
of  the  country  a  stable  basis. 

It  answered  admirably  the  purpose  for  which  it  was 
established,  and  maintained  during  its  entire  existence, 
which  ceased  in  181 1,  the  highest  reputation  for  sol- 
vency and  good  management.     It  was  not,  however,  a 


204 

popular  institution,  and  the  application  for  an  extension 
of  its  charter  failed  of  success  by  a  single  vote  in  the 
House  and  the  casting  vote  of  the  Vice-President  in  the 
Senate.  Its  re-charter  was  opposed  on  constitutional 
grounds,  and  by  the  State  banks,  which  had  then  in- 
creased in  number  to  eighty-nine,  whose  issues  it  had 
kept  in  check  by  the  system  of  redemption  which  it  had 
enforced.  Released  from  the  restraining  power  of  the 
United  States  Bank,  the  State  banks  increased  their  cir- 
culation so  recklessly  that  in  less  than  four  years  all  ex- 
cept those  in  New  England  were  forced  to  suspend  specie 
payments.  Their  suspension  and  the  consequent  de- 
preciation of  their  notes  produced  a  derangement  of 
business  for  which  there  seemed  to  be  no  remedy  but 
the  organization  of  another  Government  bank,  the  father 
of  which  was  Mr.  Calhoun,  one  of  the  strictest  inter- 
preters of  the  Constitution  in  the  South.  The  new  bank 
went  into  operation  in  1816,  and  although  less  prudently 
managed  than  its  predecessor  had  been,  it  faithfully 
performed  its  duties  as  fiscal  agent  of  the  Government 
and  held  the  State  banks  under  proper  restraint  until  it 
incurred  the  displeasure  of  President  Jackson,  then  in 
the  enjoyment  of  unlimited  popular  favor,  who  gave  to 
it  a  death  blow  by  removing  from  it  the  Government  de- 
posits and  depriving  it  of  its  fiscal  agency.  It  contin- 
ued, however,  in  existence  until  1836,  to  which  year  its 
charter  extended;  but,  being  no  longer  the  fiscal  agent 
of  the  Government,  its  prestige  was  lost  and  its  power 
and  influence  rapidly  declined  until  the  expiration  of  its 
charter.  Pennsylvania  gave  it  a  new  charter,  but  it 
was  a  United  States  bank  in  name  only,  and  by  the  un- 
wise efforts  of  its  managers  to  restore  its  former  finan- 
cial ascendency  by  speculative  operations,  it  came  to  an 
inglorious  end  in  the  general  crash  of  1837. 

In  looking  back  to  the  time  when  General  Jackson  com- 
menced his  attack  upon  the  bank  by  removing  from  it 
Government  deposits  one  can  hardly  fail  to  be  surprised 
(as  these  deposits  amounted  to  but  ten  millions  of  dol- 
lars) at  the  excitement,  the  derangement  of  business, 
and  the  apprehension  which  this  removal  produced.  No 
executive  action  ever  caused  a  feeling  so  general  and 
so  intense.     Indeed,  it  was  not  without   difficulty  that 


^6^ 

the  President  was  able  to  accomplish  his  purpose.  Mr. 
McLane,  the  Secretary  of  the  Treasury  when  the  re- 
moval was  determined  upon,  declined  to  be  the  instru- 
ment for  accomplishing  it.  He  was,  therefore,  requested 
to  resign  his  place  to  Mr.  Duane,  who,  being  no  more 
subservient  than  Mr.  McLane  had  been,  was  compelled 
to  give  way  to  Mr.  Tane}',  afterwards  the  Chief  Justice 
of  the  United  States  Supreme  Court,  by  whom  the  order 
of  the  President  was  promptly  executed.  The  speeches 
that  were  made  in  condemnation  of  this  act  of  the  Presi- 
dent by  Senators  politically  opposed  to  the  administra- 
tion, severe  and  earnest  as  they  were,  were  but  an  echo 
of  the  sentiment  of  capitalists  and  business  men  through- 
out the  country.  As  the  charter  had  but  three  years  to 
run,  the  act  of  the  President  was  not  only  of  doubtful 
legality,  but  of  more  than  doubtful  expediency;  but  the 
feeling  which  it  produced  seems  to  us  now  to  have  been 
altogether  disproportionate  to  the  act.  The  position  of 
the  President  had  been  previously  defined  in  his  message 
of  1829,  and  established  for  his  veto  for  the  extension  of 
the  charter  in  1032.  The  removal  of  the  deposits  was 
not  in  itself  mischievous;  it  was  the  veto  of  the  bank 
bill  in  1832,  and  the  use  that  was  made  of  the  deposits 
after  they  were  withdrawn  from  the  United  States  Bank, 
which  were  instrumental  in  overwhelming  the  country 
with  debt  and  bankruptcy.  The  veto  of  the  bank  bill 
had  settled  the  fate  of  the  bank;  the  party  hostile  to  it 
was  in  power,  and  likej^  to  continue  to  be;  the  States, 
therefore,  undertook  to  supply  its  place  by  institutions 
of  their  own.  Between  the  time  of  the  veto  of  the  bank 
bill  and  the  expiration  of  the  charter  of  the  bank,  large 
numbers  of  the  banks  were  organised  in  nearly  all  the 
States,  some  with  capital  and  some  without;  some  under 
the  management  of  competent  and  upright  men;  others 
under  the  management  of  men  as  destitute  of  ability  as 
they  were  of  honesty.  Banks  thus  hastily  and  improp- 
erly organised  would  have  been  pernicious  enough  if 
they  had  been  left  to  get  on  the  best  way  they  could 
with  such  resources  as  they  had  and  such  credit  as  they 
could  command;  but,  unfortunately,  a  large  number  of 
them  were  made  depositories  of  the  public  money  with 
the  expectation  on  the  part  of  the  administration,  if  not 


56() 


by  a  direct  understanding  with  the  banks  that  it  should 
be  used  in  such  a  manner  as  would  prevent  the  strin- 
gency in  the  money  market  and  the  embarrassments  to 
trade  which  it  was  predicted  would  result  from  its  with- 
drawal from  the  United  States  Bank.  The  volume  of 
expansion  had  been  rapidly  swelling  from  the  time  of 
the  veto  in  1832.  The  addition  of  the  public  money  to 
the  means  of  the  "  pet  banks,"  as  the  banks  selected  to 
be  the  Government  depositaries  were  then  called,  and 
the  liberal  use  that  was  made  of  it,  carried  the  flood 
still  higher,  until   it  culminated    in   the  terrific   crisis  of 

1837- 

Between  the  years  of  1830  and  1837  the  bank-note 
circulation  was  increased  in  round  numbers  from  sixty- 
one  millions  to  one  hundred  and  forty-five  millions; 
bank  deposits  from  fifty-five  millions  to  one  hundred 
and  twenty-seven  millions;  bank  loans  from  two  hun- 
dred millions  to  five  hundred  and  twenty-five  millions. 
The  expansion  thus  created  by  the  banks  was  attended 
not  onl}'  by  expansion  of  mercantile  credits,  which 
were  given  wnth  great  liberality,  but  it  led  the  States  to 
embark  in  interprises  of  internal  improvement  as  wild 
in  conception  as  they  were  disastrous  in  results.  As 
credit  was  cheap  and  money  was  abundant  in  Europe, 
States  borrowed  freely  and  commenced  what  were  then 
supposed  to  be  necessary  public  works  with  great  vigor, 
but  the  crisis  came,  as  is  always  the  case,  when  it  was 
not  anticipated.  A  stop  was  put  to  the  prosecution  of 
works  upon  which  large  expenditures  had  been  made, 
and  many  of  the  States,  some  of  them  among  the  rich- 
est, no  longer  able  to  borrow,  defaulted  in  the  paj^ment 
of  interest,  and  for  a  number  of  years  the  stain  of  prac- 
tical repudiation  rested  upon  a  considerable  part  of  the 
Union.  Some  of  the  debts  contracted  for  the  construc- 
tion of  works  which  had  not  been  completed  and  ought 
never  to  have  been  commenced  were  reduced  by  com- 
promise— all  were  for  years  a  burden  upon  tax-pa3^ers; 
large  amounts  are  unpaid  to  this  day.  The  misfortunes 
which  overwhelmed  the  countr}^  in  1837  and  the  long 
paralysis  which  followed  might  be  traced  to  the  veto  of 
the  bill  for  the  extension  of  the  charter  of  the  United 
States  Bank.     It  was  this  veto  that  brought  into  exist- 


267 

eiice  the  larger  portion  of  the  State  banks  which  went 
into  operation  between  1832  and  1837.  It  was  their 
rapidl}-  increasing  circulation,  their  liberality  in  making 
loans,  and  their  indulgence  to  borrowers  that  rendered 
possible  the  mercantile  credits,  ruinous  in  many  in- 
stances to  both  creditors  and  debtors,  which  gave  to  the 
country  an  appearance  of  wealth  and  progress,  and 
seemed  to  render  necessar}-  the  public  works  which  were 
so  imprudently  undertaken.  All  this  may  be  said  with- 
out condemning  the  veto.  The  United  States  Bank  was 
of  undoubted  service  to  the  Government  and  the  people 
during  the  period  for  which  it  was  chartered,  but  a  great 
financial  institution,  the  fiscal  agent  of  the  Government, 
with  power  to  control  the  business  of  a  republican 
country  like  ours,  could  not  long  retain  the  confidence 
of  the  people  or  fail  to  be  a  dangerous  engine  of  political 
power. 

The  winding  up  of  the  United  States  Bank  and  the 
proper  distrust  of  the  solvency  of  the  State  banks  ren- 
dered action  for  the  safe  keeping  of  the  public  mone3\s 
on  the  part  of  the  Government  a  matter  of  necessity. 
This  action  was  taken  in  the  divorce  of  the  Government 
from  all  connection  with  banks  by  the  issue  of  the 
famous  "  SPECIE  ciRCUivAR,"  which  prohibited  the  re- 
ceiving of  bank-notes  for  the  payment  of  public  lands 
and  customs  duties.  Up  to  this  time  the  notes  of  the 
United  States  Bank,  and  the  notes  of  the  banks  which 
had  been  appointed  depositories  of  public  moneys,  had 
been  received  in  payment  of  all  Government  dues;  from 
that  time  up  to  the  passage  of  the  Legal-Tender  Acts 
specie  alone  was  recognixed  as  money  by  the  Govern- 
ment. The  issue  of  this  circular  produced  an  excite- 
ment throughout  the  country  scarcely  less  violent  than 
that  which  was  produced  by  the  removal  of  the  deposits 
from  the  United  States  Bank,  and  yet  it  was  a  move- 
ment by  the  Government  in  the  right  direction.  The 
misfortune  was  that  it  was  not  made  sooner.  Had 
the  public  moneys,  when  drawn  from  the  United. 
States  Bank,  been  placed  in  the  Treasury  instead  of  the 
pet  banks,  an  important  stimulus  of  speculation  would 
have  been  absent,  the  advancing  tide  of  expansion  would 
have  been  checked,  and  the  disasters  which  came  over 


'2e>^ 


the  countr\'  between  the  memorable  years  of  1837  and 
1843  would  have  been  greatly  mitigated.  The  Sub- 
Treasury  Act,  requiring  the  payment  of  public  dues  in 
gold  and  silver,  was  not  only  necessary  under  the  cir- 
cumstances, but  wise  in  design  and  salutary  in  effect. 
It  freed  the  Government  from  all  connections  with 
banks,  it  protected  the  Treasury  from  loss,  and  it  kept 
constantly  before  the  people  the  knowledge  that  there 
was  a  better  currency  than  paper.  One  cannot  tell  what 
would  have  happened  if  the  distinction  between  specie 
and  United  States  notes  had  not  been  maintained  by 
that  provision  in  the  Legal-Tender  Acts  which  required 
that  customs  duties  and  the  interest  on  the  public  debt 
should  be  paid  in  coin. 

The  crisis  of  1837  was  followed  by  six  years  of  severe 
depression  in  all  branches  of  trade  and  enterprise;  con- 
fidence ceased;  distrust  of  everything  and  everybody 
took  its  place;  the  days  of  borrowing  were  ended,  and 
the  States  interposed  appraisement  and  State  laws  to 
render  difficult,  if  not  impossible,  the  collection  of  debts 
which  had  been  contracted  when  credit  was  cheap  and 
what  was  called  money  was  abundant.  A  correct  index 
of  the  condition  of  the  country  at  that  time  is  found  in 
the  condition  of  its  banking  institutions.  On  the  ist 
day  of  January,  1837,  the  bank  circulation  was  $149, 185,- 
890;  on  the  ist  day  of  January,  1843,  it  was  $58,564,000. 
During  the  same  period  the  bank  deposits  had  shrunk 
from  $127,397,000  to  $56, 1 68,000; loans  from  $525,115,000 
to  $254,544,000.  Nothing  could  more  clearl}^  indicate 
the  depression  which  prevailed  throughout  the  country, 
when  its  population  was  steadily  increasing,  than  these 
figures.  For  the  disasters  of  1837,  for  the  bankruptcy 
which  followed,  for  the  poverty  and  sorrow  which  came 
to  so  many  households,  there  were  no  natural  causes. 
There  was  no  war,  and  no  civil  commotion  to  interfere 
with  industry,  no  failure  of  sunshine  or  rain;  there 
was  simply  a  violation  of  financial  and  economic  laws, 
similar  in  some  respects  to  that  which  produced  the  col- 
lapse of  1873. 

As  an  illustration  of  what  was  supposed  to  be  an  evi- 
dence of  national  prosperit}^  but  which  was  onl}-  the 
result  of  excessive  importations,  I  will  mention  a  fact  to 


269 

which  I  have  seen  no  allnsion  for  years.  In  1835  ^"^ 
1836  the  revenues  of  the  Government  from  duties  upon 
imports  were  so  large  that  there  was  a  surplus  in  the 
Treasury  for  which  the  Government  had  no  use.  What 
to  do  with  it  was  one  of  the  most  interesting  questions 
before  the  country  in  1S35.  There  was  no  precedent  to 
guide,  for  never  before  had  a  nation  been  in  the  awkward 
position  of  having  moneys  in  the  Treasury,  upon  which 
there  were  no  claims  and  for  which  the  Government  had 
no  use.  It  was  finally  solved  by  an  act  of  Congress  ap- 
proved on  the  23d  of  June,  1836,  which  provided  that 
the  money  in  the  Treasury  on  the  ist  day  of  January, 
1837,  reserving  the  sum  of  five  millions  of  dollars,  should 
be  deposited  with  the  States  in  proportion  to  the  num- 
ber of  their  representatives  in  the  Senate  and  in  the 
House.  By  this  act  $28,101,864.91  of  the  public  niqneys 
were  distributed  among  the  twenty-six  States  of  the 
Union.  The  States  were  obligated  by  the  act  to  repay 
in  instalments  the  amount  received  by  them,  respec- 
tively, whenever  the  same  should  be  required  by  the 
Secretary  of  the  Treasury,  for  the  purpose  of  meeting 
any  wants  of  the  public  Treasury.  The  obligations  thus 
given  by  the  States  are  on  file  in  the  department,  and 
the  amount  deposited  with  them  is  still,  I  think,  included 
among  the  Treasury  assets.  This  distribution,  however, 
although  in  the  form  of  a  deposit,  was,  in  fact,  a  dona- 
tion; it  was  so  regarded  at  the  time,  and  has  been  so  re- 
garded ever  since.  I  am  sorry  that  I  am  unable  to  say 
that  the  money  thus  distributed  among  the  States  was 
judiciously  used. 

In  1844  the  revival  of  confidence,  of  industry,  and  en- 
terprise became  manifest.  The  lethargy  which  had  so 
long  prevailed  was  shaken  off",  and  so  rapid  was  the  re- 
covery that  the  following  year  was  one  of  the  most  pros- 
perous years  that  I  have  any  recollection  of.  Every- 
thing seemed  to  be  going  on  prosperously  until  1857, 
when  a  panic  occurred  which  produced  another  bank 
suspension,  and  a  sharper  and  more  ruinous  revulsion, 
during  the  period  for  which  it  lasted,  than  any  that  has 
ever  occurred  in  the  United  States;  there  were  no  decided 
premonitions  of  its  coming;  speculation  was  active  in 
some  sections,  and  the  credit  S3'stern  tgoniuch  extended; 


270 


all  clear-headed  and  prudent  men  saw  that  the  wave 
was  rising  and  that  there  were  dangers  ahead,  but  very 
few  were  prepared  for  the  break  when  it  came.  The 
failure  of  a  large  bank  in  Ohio,  which,  prudentl}^  man- 
aged at  home,  was  ruined  by  its  trusted  agent  in  New 
York,  sent  a  thrill  of  surprise,  amazement,  and  appre- 
hension throughout  the  entire  Union.  Within  two 
weeks  nearly  all  the  incorporated  banks  were  compelled 
to  suspend  and  nine-tenths  of  the  private  banks  to  close 
their  doors.  The  country  was  really  in  a  health}^  condi- 
tion; there  was  expansion,  but  not  enough  to  be  danger- 
ous, if  prudence  and  calmness  had  been  in  the  ascendant; 
but  madness  ruled  the  hour;  everybody  held  on  to  what 
money  he  had;  men  worth  millions  could  not  borrow  the 
few  thousands  needed  to  save  their  paper  from  protest; 
the  countr}^  reeled  like  a  drunken  man,  and  the  very 
foundations  of  our  monetary  system  seemed  to  be  break- 
ing up.  It  was,  however,  a  panic,  and  not  a  crisis;  it 
was  sharp,  violent,  destructive,  but  it  was  without  rea- 
sonable cause,  and  it  was,  consequentl}',  of  short  dura- 
tion. In  a  few  months  business  resumed  its  ordinar}^ 
courses,  the  financial  skies  became  clear,  confidence  re- 
turned, the  banks  were  trusted,  and  the  country  moved 
on  again  prosperous  and  serene  until  the  outbreak  of  the 
rebellion.  The  year  of  i860  was  a  year  of  great  pros- 
perity, and  so  sound  was  the  financial  condition  of  the 
country  that  no  panic  occurred  to  divert  attention  from 
the  political  dangers  to  which  the  Government  was  ex- 
posed when  the  great  drama  was  opened  in  1861.  The 
banks  of  New  York  and  Philadelphia  and  Boston, 
instead  of  being  run  upon  by  their  depositors  and  note 
holders,  were  able  to  lend  to  the  Government  a  hun- 
dred and  fifty  millions  of  dollars,  and  they  were  onl}^ 
forced  to  suspend  when  the  Secretary  of  the  Treasury 
felt  it  to  be  his  duty  to  draw  upon  them  in  favor  of  the 
Treasurer  and  Assistant  Treasurers,  according  to  the  re- 
quirements of  the  Sub-Treasury  Act.  If  the  Treasurer 
had  been  authorized  to  draw  upon  the  banks  as  pay- 
ments were  to  be  made  for  Government  supplies,  and 
his  drafts  could  have  gone,  in  the  ordinary  way,  through 
the  clearing-houses,  their  suspension  would  have  been 
deferred;   I  do  not  think  it  could  have  been  prevented. 


271 

Whether  the  war  could  have  been  prosecuted  upon  a 
specie  basis  maybe  an  interesting  question  for  speculation, 
but  it  has  no  special  interest  at  the  present  time.  The 
suspension  of  the  banks  in  the  cities  named  was  fol- 
lowed by  the  suspension  of  other  banks  throughout  the 
country,  but  there  was  no  considerable  depreciation  of 
their  notes  until  after  the  passage  of  the  Legal-Tender 
Acts. 

No  greater  responsibility  ever  rested  upon  a  financial 
minister  than  rested  upon  Mr.  Chase  while  he  was  Sec- 
retary of  the  Treasury.  It  is  true  that  his  responsibility 
was  vShared  by  Congress,  but  the  weight  of  responsibility 
was  upon  him,  inasmuch  as  every  war  loan,  in  character 
as  well  as  in  amount,  was  authorized  in  accordance  with 
his  recommendations. 

Mr.  Chase  was  not  a  trained  financier.  If  he  had  been, 
he  might  have  shrunk  from  the  responsibilities  of  his 
position;  he  might  have  hesitated  when  prompt  action 
was  required.  Great  battles  are  not  often  successfully 
fought  according  to  the  established  rules  of  war.  As 
the  Austrian  generals,  who  were  defeated  one  after  an- 
other by  Napoleon  in  his  first  Italian  campaign,  were 
astonished  at  their  defeat  by  one  whose  mode  of  fight- 
ing was  a  violation  of  all  military  science,  so  finan- 
ciers at  home  as  well  as  on  the  other  side  of  the  Atlan- 
tic were  astonished  at  the  measures  adopted  by  our 
minister  of  finance  to  raise  the  means  for  the  prosecu- 
tion of  the  war.  It  does  not  become  us  who  are  in  the 
enjoyment  of  the  priceless  benefits  of  a  preserved  Union 
to  criticize  these  measures.  There  was  but  one  for 
which  a  necessity  did  not  seemingly  exist.  The  Legal- 
Tender  Acts  provided  that  the  notes  issued  under  them 
might  be  convertible  into  the  bonds  for  the  sale  of 
which  they  were  supposed  to  be  necessary.  The  repeal 
of  this  provision  was  a  great  misfortune.  But  for  this 
the  United  States  notes  would  have  been  absorbed 
immediately  after  the  close  of  the  war  and  the  green- 
back mania,  for  such  I  regard  it,  still  so  potent  for  mis- 
chief, would  not  have  existed. 

That  he  did  not  make  other  mistakes,  others  that  all 
would  unite  in  acknowledging  and  regretting,  is  ample 
evidence  of  his  ability.     To  Mr.  Chase,  as  much  as  to 


272 


the  commanders  of  the  Union  armies,  is  the  country  in- 
debted for  its  unity.  All  honor  to  him  and  to  them; 
none  the  less  certainly  to  the  soldiers  who  fought  the 
Confederacy  in  its  strength  than  to  those  who  crushed  it 
in  its  weakness;  none  the  less  to  the  memory  of  the  \^oung 
men  of  this  University,  to  whose  honor  this  noble  build- 
ing was  erected,  and  to  the  young  men  of  all  the  col- 
leges who  went  to  the  battle-field  and  gave  up  their 
lives  for  the  Union,  the  preservation  of  which  they  saw 
only  with  the  eye  of  undoubting  faith. 

I  have  thus  dwelt  upon  the  early  financial  history  of 
the  country,  because  the  light  reflected  from  the  past  is 
the  safest  guide  for  the  future.  Whatever  lessons  the 
past  teaches  cannot  fail  to  be  useful  in  giving  direction 
to  present  sentiment. 

I  intended  to  say  all  I  had  to  say  upon  the  representa- 
tives of  money  in  a  single  lecture,  but  I  lacked  time  for 
condensation,  and  I  must  trespass  upon  your  indulgence 
in  continuing  the  subject  next  Tuesday  evening,  when 
I  hope  to  be  able  to  present  thoughts  upon  the  subject 
of  the  currency  that  may  be  worthy  of  consideration. 


Fourth  Lkcture. 
thk  national  banking  syvstf.m. 

My  lecture  this  evening  is  a  continuation  of  that  which 
I  delivered  last  Friday  evening  on  "Representatives  of 
Money."  There  are  many  of  these  representatives, 
such  as  promissory  notes,  notes  of  hand,  as  they  are 
called,  checks,  etc.  The  duties  and  offices  of  these  are 
well  understood,  and  there  is  no  difference  of  opinion 
about  their  utility,  no  political  contest  in  regard  to  them. 
I  shall,  therefore,  confine  my  remarks  to  Government 
notes  and  bank-notes.  I  shall  have  a  good  deal  to  say 
about  bills  of  exchange,  a  very  important  representa- 
tive of  money,  next  Thursday  evening,  when  I  shall 
speak  on  "Foreign  Exchanges." 

The  leading  measures  of  Mr.  Chase's  administration 
of  the  Treasury  were  the  Legal-Tender  Acts,  the  issue 
of  bonds  payable  at  a  certain  day,  but  redeemable  at  an 


273 

earlier  one  at  the  pleasure  of  the  Government,  and  the 
national  banking  system.  Of  the  Legal-Tender  Acts  I 
have  alread}^  spoken,  and  shall  speak  more  freely  fur- 
ther on.  The  wisdom  of  the  provision  that  the  six  per 
cent,  bonds  might  be  redeemed  before  their  maturity  is 
proved  by  the  ease  with  which  they  have  been  con- 
verted into  four  per  cents.,  and  the  burden  of  the  public 
debt  therebv  largelv  reduced.  He  was  strongly  advised 
to  make  them  thirty  years  bonds.  Fortunately,  he  was 
wiser  than  his  advisers.  The  establishment  of  the  na- 
tional banking  system  was,  however,  the  measure  which 
he  had  most  at  heart,  and  upon  the  success  of  which  he 
believed  the  best  financial  interests  of  the  Government 
depended.  He  regarded  the  Legal-Tender  Acts  as  a 
war  measure.  He  thought  that  without  a  large  issue  of 
notes  possessing  the  legal  qualities  of  money,  sales  of 
bonds,  sufficient  to  meet  the  wants  of  the  War  and 
Navy  Departments,  w^ould  be  impossible.  And  he  was 
guilty  of  no  inconsistency  when  he  expressed  the  opin- 
ion, as  a  Justice  of  the  Supreme  Court,  that  these  notes 
were  not  a  legal  tender  in  satisfaction  of  contracts  en- 
tered into  before  the  Legal-Tender  Acts  were  passed. 
In  one  of  the  last  conversations  I  ever  had  with  him, 
before  he  resigned  his  office  as  vSecretary  of  the  Treas- 
ury, he  said:  "  Many  things  can  be  properly  done  under 
the  war  power  of  the  Government  which  would  not  be 
tolerated  in  times  of  peace.  I  thought,  and  still  think," 
said  he,  "that  the  Legal-Tender  Acts  were  a  neces- 
sity; I  have  never  been  committed  to  their  constitu- 
tionality." 

When  the  suspension  occurred  in  1861  there  were 
some  fifteen  hundred  banks  of  issue  incorporated  under 
State  law^s;  some  solvent  and  some  of  doubtful  sol- 
vency; some  with  a  secured  circulation,  some  without  any 
other  security  than  that  afforded  by  capital  which  had, 
in  some  instances,  but  a  normal  existence.  As  all  had 
suspended,  there  were  no  means  by  which  discrimina- 
tion could  be  made  between  the  notes  of  sound  banks 
and  unsound  ones.  It  was  obvious  that  a  very  large 
amount  of  currency  would  be  required  for  the  payment  of 
soldiers  and  seamen  and  the  purchase  of  army  and  navy 
supplies,  and  the  question  which  confronted  Mr.  Chase, 


274 


one  of  the  most  difficult  which  a  financial  minister  was 
ever  called  upon  to'decide,  was,  By  what  means  shall 
this  currency  be  obtained?  He  knew  that  if  he  bor- 
rowed from  the  banks  he  would  receive  in  payment 
irredeemable  notes,  a  large  part  of  which  might  prove  to 
be  worthless.  If  he  relied  upon  the  Government  notes, 
he  would  be  doing  what  other  nations  had  done,  what, 
indeed,  had  been  done  in  Continental  times  in  his  own 
country,  without  any  certainty  or  different  results — de- 
preciation, bankruptcy,  repudiation.  After  long  and 
anxious  consideration,  he  adopted  the  principle  of  the 
free  banking  system  of  New  York,  but  with  such  se- 
curity as  would  make  the  notes  of  the  banks  current 
throughout  the  Union,  and  as  safe  as  the  bonds  of  the 
Government  and  the  limited  liability  of  the  stockholders 
could  make  them.  In  my  judgment  the  national  bank- 
ing system  is  one  of  the  chief  compensations  of  the  war. 
It  has  given  to  the  country  what  it  never  had  before — a 
bank-note  circulation  of  uniform  value  and  unquestion- 
able solvency.  Those  who  are  much  older  than  most 
of  those  whom  I  address  can  alone  appreciate  its  value. 
Nothing  could  be  less  fitted  for  the  currency  of  a  great 
country  like  ours  than  the  notes  of  the  State  banks  un- 
der the  old  systems.  Only  a  small  portion  of  them  were 
secured,  and  these,  perhaps,  not  absolutely  by  deposits 
of  bonds  in  the  State  treasuries;  none  of  them  had  a  re- 
liable credit  outside  of  the  States  in  which  the  Ijanks 
which  put  them  in  circulation  were  established.  The 
losses  that  the  people  sustained  1:)y  broken  banks  Ijefore 
the  adoption  of  the  present  system  could  be  counted  by 
millions.  The  losses  to  which  the}^  were  subjected  in 
traveling  from  State  to  State  and  in  making  exchanges 
w^ere  also  very  heavy.  The  State  bank  system  was  a 
system  under  which  bank-note  brokers  were  enriched 
and  the  people  defrauded. 

It  is  to  such  a  system  that  the  country  will  return  if 
the  present  system  should  be  destroyed,  for  I  am  quite 
sure  that  the  people  will  have  a  paper  currency  of  some 
kind,  and  I  am  equally  sure  that  this  currency  will  not 
for  a  long  period  be  furnished  by  the  Government.  The 
contest,  however,  is  between  the  Government  notes  and 
the  notes  of  the  banks.     Let  us  glance  at  the  principles 


275 


involved  in  this  contest  and  the  interests  at  stake;  let  us 
consider  the  popular  o1)jections  to  the  national  banking 
system,  and  the  real  and  substantial  objections  to  the 
substitution  of  Government  notes  for  bank-notes. 

Firstly.  It  is  contended  that  the  notes  of  the  national 
banks  are  costly  to  the  people. 

vSecondly.  That  the  national  banks  are  a  monopoly. 

Thirdly.'  That  they  are  a  great  money  power,  danger- 
ous to  the  rights  of  people. 

Fourthly.  That  they  cannot  furnish  currency  enough 
for  the  requirements  of  trade 

In  what  sense,  then,  are  the  national  banks  costly  ? 
The  banks  cannot  obtain  the  notes  which  they  put  in 
circulation  without  placing  bonds  in  the  Treasury  with 
ten  percent,  margin;  in  other  words,  they  cannot  ob- 
tain ninety  dollars  of  circulating  notes  without  deposit- 
ing a  hundred  dollars  of  United  States  bonds  in  the 
Treasury  at  Washington.  This  is  costly  to  the  banks, 
but  not  to  the  public.  It  is  not  a  voluntary  act  of  the 
banks,  it  is  what  the  Government  requires,  and  the  in- 
terests of  the  people  require  of  them,  for  the  security  of 
their  notes.  There  is  not  a  banker  in  the  United  States 
who,  looking  at  his  interests  alone,  would  not  be  right 
glad  to  be  freed  from  this  requirement.  The  bonds 
which  he  deposits  with  the  Treasurer  are  not  the  prop- 
erty of  the  public;  the  interest  they  bear  is  to  be  paid 
out  of  the  public  revenues  whether  they  are  made  the 
basis  of  circulating  notes  or  not.  Who  ever  heard  of 
complaints  against  the  free  banking  system  of  New  York 
or  of  the  West  that  it  was  a  costly  system  to  the  people? 
The  only  objection  raised  against  it  was  that  the  notes 
were  not  perfectly  secured  by  it;  nor  was  the  national 
bank  system  in  any  manner  the  creation  of  the  State 
banks;' without  an  exception,  the  State  banks  were  op- 
posed to  it  when  I  undertook  the  organization  of  the 
National  Currency  Bureau.  They  were  forced  into  it  by 
a  ten  per  cent,  tax  upon  their  notes,  which  compelled 
their  withdrawal,  and  it  is  one  of  the  interesting  facts  in 
our  financial  history  that  the  withdrawal  of  these  notes, 
and  the  substitution  of  the  notes  of  the  national  banks, 
was  accomplished  without  the  slightest  financial  disturb- 
ance.    In  less  than  two  years   from   the  passage  of  the 


276 


Bank  Act  the  notes  of  the  State  banks  were  retired,  and 
the  people  furnished  with  a  paper  currenc3^  current 
throughout  the  Union,  and  as  solvent  as  the  Govern- 
ment. The  National-Currency  Act  was  the  first  practi- 
cal assertion  of  the  authority  of  the  Government  to  reg- 
ulate and  control  the  paper  currency  of  the  country — 
the  first  performance  of  a  duty  which  it  owed  to  the  peo- 
pte — in  compelling  the  banks  to  secure  beyond  question 
their  circulating  notes.  The  national  banking  system  is 
in  no  sense  a  costly  one  to  the  people;  the  people  pay 
nothing  for  its  support.  On  the  contrary,  it  contributes 
largely  to  the  public  revenues  by  the  taxes  imposed  upon 
the  banks,  taxes  which  are  as  unwase  as  they  are  unjust, 
which  if  continued  will  force  many  of  them  into  liquida- 
tion. The  taxes  which  the  national  banks  pay  to  the 
Government,  and  the  interest  on  the  coin  reserve  which 
the  Government  \vould  be  under  the  necessity  of  main- 
taining if  it  should  undertake  to  support  a  convertible 
circulation  of  United  States  notes,  would  far  exceed  the 
interest  which  the  banks  receive  upon  the  bonds  depos- 
ited by  them  in  the  Treasury.  The  national  banking 
system,  while  it  furnishes  the  safest  paper  currency  in 
the  world,  is  not  a  profitable  system  to  bankers.  It  is 
true  that  during  the  period  of  inflation  the  banks  did, 
like  all  other  financial  institutions,  make  a  good  deal  of 
money  upon  paper,  but  their  profits  were  to  a  considera- 
ble extent  illusory.  I  fear  that  the  small  dividends  that 
some  of  them  are  now  declaring  are  making  inroads,  if 
not  upon  their  capitals  at  least  upon  their  surplus,  which 
prudence  requires  them  not  only  to  maintain  but  to  in- 
crease. The  only  way  in  which,  according  to  the  opin- 
ion of  those  who  are  opposed  to  the  banks,  money  can 
be  saved  in  supplying  the  country  with  a  paper  currency 
is  by  a  repeal  of  the  National-Currency  Act  and  the  re- 
demption of  the  bonds  in  the  safe  keeping  of  the  Treas- 
ury with  United  States  notes,  an  experiment  which,  if 
ever  tried,  will  prove  to  be  more  costly  and  disastrous 
than  any  experiment  which  has  ever  been  tried. 
The  objection,  therefore,  to  the  national  banking  sys- 
tem, that  it  is  costly  to  the  people,  is  utterly  without 
foundation. 


277 

Equally  unfounded  is  the  objection  that  it  is  a  mo- 
nopoly. So  far  from  it,  it  is  eminently  free  and  demo- 
cratic in  character.  There  is  not  a  feature  of  monopoly 
about  it.  It  permits  any  five  people  (outside  of  large 
cities  where  successful  banking  with  small  capital  is  im- 
possible), who  can  command  fifty  thousand  dollars,  to 
become  bankers.  It  requires  only  that  those  who  un- 
dertake to  lend  money  under  the  sanction  of  the  Gov- 
ernment shall  have  the  money  to  lend;  that  those  who 
exercise  the  right  of  issuing  obligations  as  money  shall 
secure  them.  So  far  and  no  further  does  the  national 
banking  system  go  towards  establishing  a  monopoly.  It 
is,  in  fact,  a  great  free  banking  system,  eminently  popu- 
lar in  its  character,  open  to  all  citizens  of  the  United 
States,  with  all  the  objections  to  a  Government  bank 
carefully  eliminated.  It  is  the  extension  of  the  free 
bank  system  first  established  in  New  York,  which  was  a 
triumph  of  popular  over  what  might  be  called,  if  I 
may  be  permitted  to  coin  a  word,  monopolistic  banking. 

Nor  is  there  any  better  foundation  for  the  charge  that 
the  national  banks  are  a  great  money  power,  dangerous 
to  the  rights  of  the  people.  What  power  has  money  in 
banks  which  it  does  not  otherwise  possess?  What  right 
of  the  people  do  the  banks  invade?  What  interests  do 
they  endanger?  Money  is  power  always  and  every- 
where; it  always  has  been  and  will  always  continue  to 
be;  no  legislation  can  prevent  it.  But  its  political 
power,  far  from  being  increased,  is,  in  fact,  lessened 
when  it  is  invested  in  bank  stocks.  The  national  banks 
have  a  large  capital,  amounting  in  the  aggregate  to 
some  four  hundred  and  seventy  millions  of  dollars, 
and  they  have  the  temporary  use  of  six  hundred  millions 
of  deposits.  Their  capital  is  made  up  of  the  earnings 
or  the  inheritances  of  a  large  number  of  people  who 
prefer  investments  in  bank  stocks  to  other  investments. 
Their  deposits  are  moneys  for  which  their  owners  have 
no  immediate  use,  and  who  place  them  in  the  banks  for 
safety  or  convenience  or  for  the  interest  which  is  paid 
on  them.  They  do  control  a  large  amount  of  money, 
but  for  business  purposes  only.  Bankers  are  not  poli- 
ticians. If  anyone  is  knowm  to  be  dabbling  in  politics, 
as  it  is  called,  the  bank  which  he  manages  is  regarded 


^7cS 

with  suspicion  and  suffers  in  credit.  The  managers  of 
banks  are  generally  men  of  ability,  but  there  are  no 
men  in  the  country  who  have  less  political  influence.  It 
would  not  be  difficult  to  find  twenty  men  in  Boston  who 
never  owned  a  share  of  bank  stock,  who  wield  more 
power  in  elections  than  all  the  officers,  directors,  and 
employees  of  all  its  national  banks.  Unfortunately, 
bank  managers,  like  other  business  men,  are  too  apt  to 
neglect  political  affairs.  Some  are  so  absorbed  by  offi- 
cial duties  or  private  enterprises,  some  so  afraid  of  what 
they  call  political  dirt,  that  it  is  only  by  strong  pressure 
in  an  exciting  election  that  they  can  be  induced  even  to 
vote.  This  is  a  free  country,  and  men  can  go  to  the  polls 
or  they  can  stay  away,  according  to  their  own  good 
pleasure,  but  if  they  suppose  they  are  to  be  freed  from 
politics  and  politicians  by  neglecting  their  own  political 
duties,  they  are  grievously  mistaken.  The}"  have  their 
existence  in  a  political  atmosphere  from  which  there  is 
no  escape.  Ours  is  a  Government  of  the  people,  which 
is  in  constant  peril  when  those  who  have  the  greatest 
interest  in  its  maintenance  manifest  no  personal  concern 
in  the  administration  of  its  affairs.  "Eternal  vigilance 
is  the  price  of  liberty."  When  this  vigilance  ceases  to 
be  exercised  by  those  who  have  the  most  at  stake,  des- 
potism will  become  a  necessity.  So  far  are  bankers  from 
combining  for  the  purpose  of  controlling  elections,  that 
the}^  generally  shrink  from  the  performance  of  their 
duty  as  citizens  in  the  selection  of  candidates  and  at  the 
polls.  There  has  never  been  a  combination  of  the  na- 
tional banks  for  any  political  purpose  whatever.  The}" 
have  not  even  attempted  a  combination  of  their  influ- 
ence to  effect  a  reduction  of  the  grievous  taxes  which 
are  imposed  upon  them.  The  banks  are  by  no  means 
under  the  control  of  men  of  the  same  party,  nor  are 
they  in  the  enjoyment  of  privileges  which  they  are  es- 
pecially anxious  to  retain.  The  State  banks  were  forced 
into  the  national  banking  system,  and,  if  a  vote  were 
taken  to-day,  a  majority,  regarding  their  own  interests 
alone,  would,  as  I  have  said,  be  in  favor  of  being  placed 
again  under  the  control  of  the  States.  The  national 
system  of  banking  was  established  not  for  the  benefit  of 
the  bankers,   but  for  the  benefit  of  the  people,  and  the 


279 

people  will  be  blind  to  their  own  interests  if  they  per- 
mit it  to  be  destroyed.  That  it  is  not  especially  attrac- 
tive is  proved  by  the  fact  that,  although  open  to  all, 
there  are  in  the  United  States  nearly  four  thousand  State 
banks  and  private  bankers,  with  a  capital  of  over  two 
hundred  millions  of  dollars  and  deposits  exceeding  four 
hundred  millions,  that  decline  to  connect  themselves 
with  it.  The  objection  that  the  system  is  dangerous  to 
the  rights  of  the  people  as  a  great  money  power  is  as 
groundless  as  the  other  objections  which  I  have  con- 
sidered. 

Nor  is  there  any  ground  for  apprehension  that  the  na- 
tional banks  will  either  be  unable  or  unwilling  to  furnish 
all  the  paper  money  that  will  be  needed  for  legitimate 
trade.  The  cause  of  apprehension  is  in  the  other  direc- 
tion. There  is  a  consistent  tendency  to  excessive  is- 
sues by  the  banks  when  currency  is  on  demand.  The 
business  depression  which  has  existed  within  the  last 
five  years  in  the  United  States  was  caused,  in  no  small 
measure,  by  the  large  issues  of  notes  by  the  Govern- 
ment and  the  banks.  There  is  not  a  single  branch  of 
industry  in  this  country  which  is  suffering  for  want  of  a 
circulating  medium,  not  one  that  would  be  benefited  by 
an  increase  of  it.  I  will  go  further,  and  on  this  point  I 
can  speak  advisedly,  for  I  have  been  for  forty  years  a 
careful  observer  of  the  condition  of  trade  in  the  United 
States  and  of  the  causes  which  have  produced  hard  and 
prosperous  times;  I  will  go  further  and  assert  that  there 
has  been  no  time  when  industry  has  languished,  and  the 
production  of  factories  and  fields  have  failed  to  fetch 
remunerative  prices,  by  reason  of  a  scarcity  of  money 
to  pay  for  them.  What  is  now  needed  for  a  general 
revival  of  business  in  not  more  money,  but  what  has 
always  been  needed  in  times  of  depression,  more  work 
for  laborers,  more  and  better  markets  for  our  produc- 
tions. As  I  remarked  in  a  previous  lecture,  prices  of 
most  of  the  productions  of  the  country  are  low,  of  many 
articles  lower  than  they  were  before  the  war;  the  prices 
of  some  are  even  below  the  cost  of  production,  and  yet  cur- 
rency w^as  never  before  so  cheap  or  so  abundant.  An 
increase  of  the  volume  of  the  circulating  medium  would 
aggravate  instead  of  lessening  the  existing  trouble,  by 


280 

breaking  confidence,  which  is  the  mainspring  of  inter- 
prise.  No  reasonable  objection,  therefore,  lies  against 
the  national  banking  system  on  account  of  its  present  or 
prospective  inability  to  supply  the  country  with  all  the 
currency  required  for  all  legitimate  and  useful  purposes. 

That  well-managed  banking  institutions  are  conducive 
to  national  prosperity  is  proven  by  the  experience  of  all 
great  commercial  nations.  There  is  not  one  which  has 
not  found  them  as  banks  of  issue,  as  well  as  of  deposit 
and  discount,  not  only  a  popular  convenience,  but  a 
great  commercial  advantage.  Whatever  losses  have 
been  sustained  by  them  were  the  result  either  of  defects 
in  the  laws  under  which  they  were  organized  or  of  mis- 
management. As  far  as  depositors  can  be  protected 
they  are  protected  under  the  present  system,  by  the 
requirements  that  the  capital  of  the  banks  shall  be  fully 
paid  up;  by  the  liability  of  stockholders  for  an  amount 
equal  to  their  stock  in  addition  to  it;  by  the  supervision 
to  which  they  are  subjected  l)y  competent  examiners; 
by  limitations  upon  their  loans,  and  by  the  penalties  im- 
posed upon  officers  and  directors  for  fraudulent  misnmn- 
agement,  of  which  insolvency  is  prima  facie  evidence. 
No  such  failure  as  that  of  the  Bank  of  Glasgow,  or  ap- 
proximating it,  could  have  occurred  under  our  national 
banking  system.  So  far  as  the  note  holders  are  con- 
cerned, and  their  interests  are  a  matter  of  primary  im- 
portance, the  protection  is  absolute.  No  other  banking 
system  in  the  world  aftbrds  superior  protection  to  depos- 
itors; none  is  equal  to  it  in  the  security  it  gives  to  circu- 
lating notes.  It  is  this  system  which  gives  to  the  coun- 
try what  has  been  so  long  desired — a  bank-note  circu- 
lation of  uniform  value  and  unquestionable  solvency — 
that  is  now  endangered  by  a  proposition  to  substitute  for 
the  notes  of  the  banks  the  notes  of  the  Government. 
Now,  let  us  see  what  this  population  involves. 

It  involves,  among  other  things,  the  winding  up  of  a 
large  part  of  the  national  banks  and  the  conversion  of 
the  rest  into  State  or  private  banks.  If  this  conversion 
should  be  back  to  State  banks  there  would  be  a  repeti- 
tion of  the  evils  from  which  the  country  suffered  disas- 
trousl}'  for  so  many  years,  a  bank-note  circulation  of 
local  credit  and  uncertain   value;  if  into  private  banks 


28l 


there  would  simply  be,  instead  of  banks  of  issue,  an  in- 
crease of  offices  of  discount  and  deposit,  issuing  no 
notes,  subject  to  no  supervision,  conducted  merel}-  for 
private  gain.  To  such  an  entertainment  is  the  country 
invited  by  the  opponents  of  the  existing  system.  It  is 
contended,  I  know,  that  the  deprivation  of  the  privilege 
of  issuing  notes  would  neither  necessitate  the  winding 
up  of  national  banks  nor  their  conversion  into  local  or 
private  institutions.  Why  it  would  not  we  are  not  in- 
formed. To  many  of  the  banks  the  right  to  issue  notes 
is  of  some  value,  not  much,  it  is  true,  but  still  suffi- 
cient to  induce  them  to  remain  in  the  national  system. 
The  profits  of  the  banks,  whose  notes  will  soon  be  based 
upon  four  per  cent,  bonds  on  their  circulation,  after  de- 
ducting their  taxes  thereon,  will  not,  as  has  been  shown 
by  the  recent  exhaustive  report  of  the  Comptroller  of 
the  Currency,  exceed  one  and  a  half  per  cent. ;  but  these 
profits,  small  as  they  are,  are  the  only  compensation 
which  they  have  for  the  annoyances  to  which  they  are 
subject  as  national  banks.  Deprived  of  these  profits, 
the  majority  of  them  would  call  in  their  loans  and  go 
into  liquidation  to  the  great  disturbance  of  business  and 
the  severe  prejudice,  if  not  ruin,  of  their  debtors.  Those 
who  did  not  do  this  would  go  back  to  the  old  system  or 
into  private  banking.  Whenever  the  national  banks  are 
deprived  of  the  power  to  issue  notes  the  power  of  the 
Government  over  them  will  cease.  The  national  bank- 
ing system  was  established  to  give  to  the  people  a  paper 
circulation  upon  which  they  could  safely  rely  and  which 
they  could  use  at  par  in  every  part  of  the  Union.  When- 
ever the  privilege  of  issuing  notes  is  withdrawn  from 
the  banks  the  very  object  for  which  they  were  chartered 
will  be  terminated.  A  national  banking  system  without 
a  national  bank-note  circulation  would  be  an  absurdity. 
The  substitution  of  United  States  legal-tender  notes 
for  the  notes  of  the  national  banks  means  also  the  per- 
petuation of  a  local  measure  of  value  fluctuating  in 
amount,  and,  consequenth^  in  purchasing  power,  instead 
of  the  long-established  constitutional  measure.  One  of 
the  first  questions  which  came  up  for  consideration  after 
the  adoption  of  the  Constitution  was  the  authority  of 
Congress  to  incorporate  a  bank  to  be  the  fiscal  agent  of 


282 


the  Government,  with  the  right  to  issue  notes,  not  as 
lawful  money,  but  as  a  circulating  medium,  to  facilitate 
exchanges  and  to  give  life  to  languishing  industry  and 
trade.  On  this  question  there  was  a  great  difference  of 
opinion,  not  only  in  Congress,  but  in  the  Cabinet.  Jef- 
ferson and  Randolph  were  opposed  to  it,  Hamilton  and 
Knox  in  favor  of  it.  Washington  agreed  with  the  latter, 
and  gave  to  the  act  incorporating  the  first  United  States 
national  bank  his  approval.  As  far  as  we  can  judge 
from  the  discussions  at  the  time,  a  provision  in  the  bank 
act  to  make  the  notes  of  the  bank  lawful  money  would 
not  have  had  a  single  supporter  in  Congress.  It  re- 
mained for  statesmen  of  the  present  day  to  discover  the 
authority  of  Congress  to  give  to  anything  but  gold  and 
silver  the  quality  of  money.  Indeed,  not  only  the  au- 
thority of  Congress  to  incorporate  a  United  States 
bank,  but  the  authority  of  the  States  to  create  State 
banks  of  issue,  was  for  a  long  time  a  mooted  question. 
Up  to  the  time  of  the  passage  of  the  Legal-Tender  Acts 
in  1862  there  was  probably  no  lawyer  in  the  United 
States,  whose  opinion  was  entitled  to  the  slightest  re- 
spect, who  did  not  agree  with  Mr.  Webster,  that  as  Con- 
gress had  no  power  granted  to  it  in  that  respect  except 
to  coin  money  and  regulate  the  value  of  foreign  coins, 
it  clearl}^  had  no  power  to  substitute  anything  else  for 
coin  as  a  tender  in  the  payment  of  debts  and  in  the  dis- 
charge of  contracts.  Nor  did  any  advocate  of  these 
acts  justify  his  advocacy  by  the  sanction  of  the  Consti- 
tution. They  were  advocated  and  passed  as  war  meas- 
ures outside,  if  I  may  so  speak,  of  the  Constitution,  and 
as  war  measures  onh'. 

The  substitution  of  United  vStates  notes,  with  the  qual- 
ity of  money,  for  bank-notes  is  objectionable,  therefore, 
on  constitutional  grounds.  The  change  which  has  re- 
cently taken  place  in  the  opinions  of  distinguished  men 
upon  this  vital  question  is  remarkable.  Many  of  those 
who  were  formerly  the  strictest  of  strict  construction- 
ists, who  denied  the  right  of  Congress  to  issue  notes  as 
lawful  money  even  under  the  war  power  of  the  Govern- 
ment, when  such  issues  were  thought  to  be  necessar}- 
for  the  preservation  of  the  Union,  are  now  in  the  time 
of  peace  in  favor  of  increased,  if  not  of  unlimited,  issues. 


283 


Let  us  look  at  this  question  a  little  more  closely.  The 
Constitution  is  the  supreme  authority  from  which  Con- 
gress derives  its  law-making  power.  No  law  is  consti- 
tutional which  is  not  in  harmony  with  it,  and  while  a 
liberal  construction  may  be  necessary  to  carrj^  out  its 
provisions,  a  construction  which  gives  to  Congress  au- 
thority not  warranted  by  its  letter  or  spirit  subverts  the 
basis  of  constitutional  government.  The  Constitution 
gives  to  Congress  the  power  to  coin  money  and  to  fix  a 
value  upon  the  coins  of  other  nations,  to  establish  mints 
to  convert  gold  and  silver  l)ullion  and  foreign  coins  into 
coins  of  the  United  States.  Authority  to  issue  notes  as 
lawful  monej^  is  not  given  to  it  by  the  Constitution,  nor 
is  such  authority  needed  for  the  execution  of  any  of  its 
powers.  If,  by  the  authority  given  to  Congress  to  coin 
money  and  regulate  the  value  of  foreign  coins,  the  right 
to  issue  legal-tender  notes  as  a  currenc}'  can  be  fairly 
inferred,  I  can  conceive  of  no  act  of  despotism  which 
it  might  not  perform  under  the  fundamental  law  which 
was  framed  with  a  view  to  define  and  limit  Federal  au- 
thority. 

There  are  other  strong  objections  to  the  United  States 
notes  as  lawful  money.  They  have  no  intrinsic  value;  they 
are  not  money  in  any  proper  meaning  of  the  word;  they 
are  made  money  b}^  acts  of  Congress,  but  the}^  are  not 
regarded  or  treated  as  such  outside  of  the  United  States. 

Their  value  depends  upon  their  being  convertibe 
into  coin  and  their  being  made  receivable  for  public 
and  private  dues.  Their  legal-tender  quality  is  a  viola- 
tion not  only  of  the  Constitution,  but  of  the  common  law 
of  commercial  nations. 

There  are  also  overwhelming  objections  in  another 
respect  to  Government  notes.  There  can  be  no  limita- 
tion, if  the  authority  to  issue  them  is  admitted,  upon  the 
amount  that  might  be  put  in  circulation.  By  one  Con- 
gress the  limitation  might  be  three  hundred  millions;  by 
another  the  limitation  might  be  extended  to  five  hundred 
millions;  by  another  to  a  thousand  millions,  and  so  on. 
How  could  business  be  conducted  with  safet}'  if  the 
power  to  increase  the  lawful  measure  of  value  were  in- 
trusted to  Congress,  no  matter  what  party  might  be  in 
control  of  the   Government?      Would  the    Democratic 


284 


party  be  willing  to  intrust  such  power  to  Republicans? 
Would  the  Republican  part}'  intrust  it  to  Democrats? 
Would  business  men — would  the  laboring  classes — be 
willing  to  intrust  it  to  either?  No  government  in  the 
world  is  wise  enough  or  honest  enough  to  be  intrusted 
with  the  authority  to  make  money  by  what  is  now  called 
its  fiat,  or  by  merely  promising  to  pay  it.  To  my  mind 
the  objections  to  continued  issues  by  the  Government  of 
legal-tender  notes  are  insuperable.  Other  nations  have 
resorted  to  such  issues,  but  only  under  the  pressure  of 
great  and  immediate  necessities.  B}-  no  solvent  gov- 
ernment have  such  notes  been  issued  for  a  permanent 
currency,  and  never  has  the  great  fundamental  interna- 
tional law,  which  makes  gold  and  silver  alone  money, 
been  violated  by  any  nation,  no  matter  under  what  cir- 
cumstances, without  discredit  to  itself  and  prejudice  to 
its  people. 

The  main  objection  to  Government  notes  would  be 
lessened  if  they  were  deprived  of  their  legal-tender 
quality,  but  other  serious  objections  would  still  remain. 
A  paper  circulation  can  only  be  useful  when  it  is  con- 
nected with  business  operations.  It  should  never  be 
anything  more  than  a  supplement  to  the  precious  metals. 
Always  redeemable,  its  volume  should  be  regulated  not 
by  arbitrary  authority,  but  by  the  requirements  of  trade. 
Such  a  regulation  can  never  exist  when  the  circulation 
is  furnished  by  the  Government.  No  legislative  body, 
even  if  no  political  or  other  improper  influences  were 
brought  to  bear  upon  it,  could  determine  the  amount  of 
paper  currency  which  the  countr}'  required.  If  the 
present  Congress,  having  no  fear  of  a  veto  by  the  Presi- 
dent, should  undertake  to  determine  how  much  currenc}^ 
is  now  needed  to  supply  current  wants,  is  it  at  all  proba- 
ble that  the  amount  would  be  reasonably  restricted? 
Current  wants,  by  some  members,  would  be  regarded  as 
including  only  what  is  needed  to  facilitate  existing  trade; 
but  a  majority  would,  I  fear,  include  in  current  wants 
the  amount  needed,  in  their  opinion,  to  "revive  our  lan- 
guishing industries  and  develop  the  national  resources." 
A  gentleman  of  large  wealth  and  much  general  intelli- 
gence, perfectly  sound  upon  other  subjects,  but  at  sea 
upon  the  subject  of  currency,  said  to  me  in  November 


285 


last,  that  "  the  financial  troubles  which  had  come  over 
the  country  were  the  result  of  contraction  "  (although 
the  volume  of  paper  money  then  outstanding  was  three 
times  larger  than  at  any  time  before  the  war),  and  that 
"  two  thousand  millions  were  required  for  a  restoration 
of  former  prosperity."  Into  what  overwhelming  disas- 
ter would  not  the  country  be  plunged  if  such  a  man, 
and  he  is  a  representative  of  his  party,  had  the  control 
of  the  national  finances  ?  The  only  way  in  which  cur- 
rency can  be  furnished  by  the  Government  is  by  the  use 
of  it  in  redeeming  outstanding  bonds,  or  in  reducing 
taxes,  or  increasing  public  expenditures.  What  would 
the  bonds  be  worth  if  they  were  redeemable  in  a  cur- 
rency the  volume  of  which  might  be  unlimited?  What 
economy  would  there  be  in  the  public  expenditures  if 
the  printing  press  could  be  made  to  do  the  work  of  the 
tax  collector  ?  Who  would  be  audacious  enough  to  talk 
about  taxes  and  the  necessit}-  of  maintaining  the  public 
credit  by  a  judicious  revenue  system,  if  money  could  be 
made  without  any  other  expense  than  such  as  would  be 
required  in  printing  notes  ?  I  venture  the  prediction,  if 
this  power  is  ever  fully  exercised,  that  the  halls  of  Con- 
gress will  be  converted  into  a  gambling  house,  whose 
operations  will  cast  into  the  shade  those  of  the  stock 
exchanges  of  our  commercial  cities. 

But  sui)pose  that  more  prudent  counsel  should  prevail 
and  the  volume  of  currency  should  be  limited  to  the 
amount  now  existing  and  continue  to  be  convertible  into 
coin,  could  the  Government  properly  do  the  w^ork  of 
banking  institutions  ?  Would  the  Treasurer  at  Washing- 
ton and  the  Assistant  Treasurers  in  our  commercial 
cities  be  the  proper  agents  for  redeeming  notes  ?  It  is 
true  that  the  United  States  notes  are  convertible  into 
coin  and  that  the  holders  can  have  them  redeemed  by 
presenting  them  at  the  offices  of  the  Assistant  Treasur- 
ers, but  this  is  because  the  amount  is  limited  and  be- 
cause there  is  no  demand  for  coin  for  exportation.  Let 
the  United  States  notes  be  substituted  for  the  outstanding 
notes  of  the  national  banks,  and  increased  to  seven  hun- 
dred millions  (if  not  to  a  much  larger  amount)  instead 
of  three  hundred  millions,  then  we  shall  see  how  this 
system  will  work  wdien  the  exchanges  even  for  a  short 


286 


period  are  unfavorable.  If  we  are  to  have  a  convertible 
paper  currency  it  will  be  as  it  has  been  in  all  other 
countries,  through  the  instrumentality  of  banks,  with 
limited  power  of  issue,  and  whose  existence  is  made  de- 
pendent upon  their  ability  to  redeem  the  notes  which 
they  put  in  circulation.  It  must  have  been  noticed, 
however,  by  all  who  have  paid  attention  to  the  discus- 
sions of  this  subject  in  Congress  or  before  the  people, 
that  a  circulation  the  value  of  which  will  depend  upon 
its  convertibility  is  not  what  is  required  by  the  advo- 
cates of  direct  issues  by  the  Government.  What  they 
contend  for  is  Government  notes  which  will  not  need 
convertibility  to  give  them  value,  notes  which  shall  be 
themselves  raone}',  no  matter  what  may  be  their  value 
in  comparison  wnth  coin.  Their  real  objection  to  the 
notes  of  the  banks  is  that  they  stand  in  the  way  of  un- 
limited issues  of  United  States  legal-tender  notes. 

It  is  understood  that  our  able  finance  minister  thinks 
it  would  be  judicious  to  keep  three  hundred  millions  of 
the  United  States  notes  in  permanent  circulation.  It  is 
reported  that  he  has  gone  very  much  further  than  this; 
that  he  has  said,  "If  there  should  be  a  contest  as  to 
which  should  furnish  the  country  with  circulating  notes, 
the  Government  or  the  banks,  he  should  be  on  the  side 
of  the  Government,"  which  means  that  to  bank-notes, 
perfectly  secured  by  the  bonds  of  the  Government,  and 
the  liability  of  stockholders,  limited  in  amount  by  de- 
posits with  the  Treasurer,  and  which  are  not  a  legal  ten- 
der, he  w^ould  prefer  the  notes  of  the  Government,  made 
lawful  money  by  statute,  the  amount  of  which  to  be  put 
into  circulation  would  be  restricted  only  by  the  discre- 
tion of  Congress.  In  taking  this  position  he  would  dis- 
regard the  experiences  of  other  nations  as  well  as  our 
own,  and  we  would  find  few  supporters  among  the  best 
thinkers  and  most  intelligent  business  men  of  the  coun- 
try. That  bank-notes  in  the  United  States  are  now  an- 
swering a  legitimate  and  useful  purpose  is,  I  think,  un- 
deniable by  those  even  who  prefer  to  them  the  notes  of 
the  Government.  They  do  not  usurp  the  place  of  coin; 
their  value  depends  upon  their  convertibility  and  the  se- 
curity lodged  with  the  Treasurer;  they  find  their  way 
Into  circulation  through  business  channels;  they  repre^ 


287 

sent  business.  The  banks  that  issue  notes  have  some- 
thing to  show  for  them— the  obligations  of  borrowers. 
Not  so  with  the  notes  of  the  Government;  they  claim  to 
be  what  they  are  not;  they  are  made  money  by  statute, 
but  they  are  merely  obligations  for  the  payment  of 
money.  ^  By  being  made  a  legal  tender,  they  become  a 
false  and  deceptive  measure  of  value.  A  legal  substi- 
tute for  coin,  they  drove  coin  out  of  circulation  for  years, 
and  they  will  always  work  in  this  direction.  The  specie 
standard  will  not  be  permanently  restored,  the  financial 
question  will  not  be  removed  from  the  political  arena, 
nor  will  the  business  of  the  country  rest  upon  a  solid 
basis,  until  they  are  deprived  of  their  legal-tender 
quality  by  an  act  of  Congress  or  the  decision  of  the  Su- 
preme Court,  and  gradually  retired  from  circulation. 

Great  consideration  should  be  given  to  the  opinions  of 
the  Secretary  of  the  Treasury  upon  financial  questions. 
Especially  should  this  be  the  case  when  he  has  been 
identified  for  years  with  our  financial  legislation.  In 
differing  with  Mr.  Sherman,  for  whose  ability  I  have 
great  respect,  and  to  whom  the  country  is  greatly  in- 
debted for  his  successful  administration  of  the  Treasury, 
I  might  doubt  the  correctness  of  my  own  conclusions 
were  I  not  sustained  by  speeches  and  reports  made  by 
himself  when  he  was  in  the  Senate. 

On  the  13th  of  February,  1862,  in  an  able  speech  in 
favor  of  the  first  Legal-Tender  Act,  authorizing  the  is- 
sue of  one  hundred  and  fifty  millions  of  United  States 
notes,  he  used  the  following  language: 

The  only  objection  to  this  issue  of  paper  money  is  that  too 
much  may  be  issued;  there  is  the  only  danger  in  it.  I  do  not 
believe  the  issue  of  one  hundred  and  iifty  millions  will  do  any 
harm,  but  if  you  continue  to  issue  other  sums  you  will  at  once 
depreciate  the  credit  of  these  demand  notes  (meaning  the  out- 
standing Treasury  notes  which  were  not  a  tender),  and  destroy 
their  value.  If  you  confine  it  to  the  amount  limited  by  this 
bill,  I  believe  the  effect  will  be  healthy  in  all  of  the  business  re- 
lations of  the  countrv. 

This  is  a  mere  temporary  expedient.  It  is  manifest  that  we 
must  rely  upon  some  other  source  of  obtaining  money.  We 
dare  not  repeat  this  experiment  a  second  time.  If  we  do  we 
enter  upon  the  same  course  that  was  followed  in  the  French 
Kevolution,  and  also  by  our  American  ancestors, 


288 


On  the  17th  of  December,  1867,  in  a  report  upon  the 
public  debt,  he  expressed  his  own  opinion  and  that  of 
the  Finance  Committee  of  the  Senate,  of  which  he  was 
chairman,  as  follows: 

Your  committee  are  of  the  opinion  that  the  time  is  not 
distant  when  it  will  become  the  duty  of  Congress  to  repeal  so 
much  of  the  existing  laws  as  makes  the  United  States  notes  a 
legal  tender  in  the  payment  of  debts,  either  public  or  private. 
This  provision  was  adopted  with  extreme  reluctance,  and  under 
the  pressure  of  overwhelming  necessity.  The  debates  in  Con- 
gress at  the  time  this  measure  was  adopted  show  conclusively 
that  it  was  universally  regarded  as  a  temporary  expedient.  It 
is  inconsistent  with  sound  financial  principles,  and  was  never 
resorted  to  since  the  commencement  of  the  present  Govern- 
ment until  February  25,  1862.  The  evils  produced  by  Conti- 
nental money  were  so  fresh  in  the  minds  of  the  founders  of  the 
Government,  that  during  the  financial  difficulties  which  fol- 
lowed the  adoption  of  the  ConstitvUion  no  one  proposed  such 
an  expedient.  During  the  War  of  1812,  when  financial  enibar 
rassments  had  impaired  the  revenue  and  destroyed  the  public 
credit,  a  limited  tender  Treasury  note  was  proposed  and  w-as 
promptly  rejected.  Mr.  Dallas,  in  a  communication  to  the 
Committee  on  Ways  and  Means,  declared,  "That  the  extremity 
of  that  day  cannot  be  anticipated  when  any  honest  or  enlight- 
ened statesman  will  again  venture  upon  the  desperate  expe- 
dient of  a  tender  law.  We  were  driven  to  that  extremity,  but 
should  hasten  to  abandon  so  desperate  a  remedy  at  the  earliest 
day  practicable.  The  moment  at  which  we  can  restore  the 
notes  to  a  specie  standard  should  be  signalized  by  a  return  to 
correct  principles,  and  our  United  States  notes  should  stand 
like  all  other  paper  mouc}-,  receivable  only  at  the  pleasure  of 
the  creditor. 

In  a  speech  in  the  Senate  upon  the  currency,  January 
24,  1870,  Mr.  Sherman  said: 

I  believe  the  judgment  of  the  country  is  gradually  settling 
down  to  the  conviction  that  a  note  issued  by  a  government 
cannot  be  a  proper  agency  of  circulation.  Other  nations  as 
well  as  our  own  have  often  tried  the  experiment  of  maintaining 
a  circulating  note  issued  by  the  Government,  and  they  have 
universally  found  it  to  fail.  It  is  impossible  to  give  to  currency 
issued  by  a  government  the  flexibility  necessar}*  to  meet  the 
demand  of  the  exchanges,  and  therefore  experience  has  shown 
that  a  note  issued  by  a  government,  and  maintained  upon  the 
guarantee  of  the  government  alone,  does  not  form  a  good  cir- 
culating medium,  except  during  a  suspension  of  specie  pay- 
ments. It  must  have  a  flexibility  which  will  enable  it  to  be  in- 
creased in  certain  periods  of  the  year,  and  to  flow  back  again 
into  the  vaults  of  the  banks  at  others.  I  am  convinced,  although 
it  is  unnecessary  to  disciiss  that  point  here,  that  in  time  it  will 


289 


be  wise  to  retire  our  United  States  notes  and  all  forms  of  Gov- 
ernment circulation,  and  depend  upon  notes  issued  by  private 
corporations,  amply  secured  ])eyond  peradventure,  so  that  in 
no  case  can  the  note  holders  lose,  and  to  subject  the  banks  to 
regulations  applicable  to  all  parts  of  the  country,  making  them 
free,  so  that  the  business  of  banking  will  be,  like  the  business 
of  manufacturing,  blacksmithing,  or  any  other  ordinary  occu- 
pation or  business  of  life,  governed  only  by  general  law. 

These  were  no  hasty  titterances.  They  were  care- 
fully considered  opinions  expressed  at  intervals  of  years; 
they  cover  the  whole  ground  of  the  present  controversy. 
If  the  minister  differs  from  the  vSenator,  I  must  stand  with 
the  senator,  and  so,  I  hope  and  believe,  will  the  coun- 
try. 


Fifth  Lecture. 

NATIONAL     DEBTS    AND     FOREIGN     AND     DOMESTIC     EX- 
CHANGE. 

In  my  last  lecture  I  spoke  of  paper  obligations  as  rep- 
resentatives of  coin,  and  dwelt  at  some  length,  perhaps 
unnecessary  length,  upon  the  question  of  the  substitu- 
tion of  national  legal-tender  notes  for  the  notes  of  the 
national  banks.  I  have  dwelt  upon  this  question  because 
I  regard  it  as  one  upon  the  proper  settlement  of  which 
the  national  credit  and  the  welfare  of  the  people  largely 
depend.  It  is  a  question  in  regard  to  which  the  country 
ought  not  to  go  wrong,  and  will  not,  if  it  is  calmly  and 
carefully  considered.  Great  things  have  been  accom- 
plished in  the  United  States  within  the  last  seventeen 
years,  things  that  are  regarded  as  marvels  by  enlight- 
ened and  fair  minded  observers  on  the  other  side  of  the 
Atlantic.  What  military  man  in  Europe  supposed  that 
a  civil  war,  waged  with  such  heroism  and  persistency 
on  both  sides,  would  terminate  as  ours  did;  that  a  million 
of  our  men,  some  of  whom  were  in  the  service  for 
years,  and  all  long  enough  to  acquire  a  taste  for  a  sol- 
dier's life,  could  be  "  mustered  out "  and  be  sent  to  their 
homes  without  a  single  instance  of  violence  or  popular 
disturbance  ?  What  financier  supposed  that  a  reduction 
of  our  public  debt  would  be  commenced  within  six 
pionths   from   the  end   of  the   war,    and   be   continued 


290 

throughout  a  period  of  unparalleled  financial  depression 
and  disaster,  until  one-third  of  it  had  been  paid  and  the 
burden  of  the  balance  had  been  greatly  lightened  by  re- 
ductions in  the  rate  of  interest  which  it  bears  ?  Who 
that  was  cognizant  of  the  history  of  similar  experiments 
could  have  dreamed  that  the  United  States  notes  would 
go  all  the  way  down  from  one  or  two  per  cent,  discount 
in  1862  to  sixty  per  cent,  discount  in  1864,  and  be 
brought  up  to  par  in  gold  in  1878  ?  Mistakes  have  been 
made  and  much  suffering  has  been  caused  by  them,  but 
no  government  has  a  more  creditable  financial  record 
than  that  of  the  United  States.  All  that  is  now  required, 
as  far  as  the  action  of  the  Government  is  regarded,  is  a 
judicious  revenue  system  and  a  stable  currency  to  insure 
to  our  people  greater  prosperity  than  they  have  hereto- 
fore enjoyed,  greater  than  has  fallen  to  the  lot  of  the 
people  of  any  other  nation. 

I  propose  in  this  lecture  to  speak  upon  two  subjects, 
distinct,  and  yet  in  some  respects  involved,  viz,  national 
debts  and  foreign  and  domestic  exchange. 

By  national  debts  is  meant  debts  of  governments  in 
their  national  capacity.  These  debts,  in  their  present 
form,  are  of  recent  origin.  Four-fifths  of  their  present 
amount  have  been  contracted  within  the  present  century. 
Their  aggregate,  exclusive  of  municipal  debts,  exceeds 
twenty  thousand  millions  of  dollars.  All  governments 
have  at  times,  in  one  form  or  another,  been  borrowers. 
In  early  times  their  loans  were  local,,  temporary,  and  in- 
considerable in  amount.  Italy  took  the  lead  in  shaping 
the  form  of  existing  national  debts  by  funding  tem- 
porary loans  in  interest-bearing  obligations,  payable  at 
a  distant  day.  Her  example  was  contageous.  Other 
nations  not  only  followed  her  lead  in  funding  existing 
debts,  but  they  became  borrowers  on  similar  obligations; 
and  as  they  increased  in  population  and  wealth,  lenders 
became  plentiful,  and  there  was  a  constantly  increasing 
demand  for  this  class  of  securities.  The  temptation 
thus  placed  before  governments  to  borrow,  rather  than 
to  supply  their  wants  by  taxation  became  irresistible, 
and  their  wants  kept  pace  with  their  facilities  for  bor- 
rowing. To  such  an  extent  have  the  debts  of  many  of 
the  European  States  been  swollen  that  the   payment  of 


291 

anything  more  than  the  interest  thereon  is  regarded  as 
being  among  the  impossibilities.  In  the  budgets  of 
the  richest  European  nations  one  rarely  sees  provision 
for  the  reduction  of  their  debts.  Their  finaricial  minis- 
ters are  quite  content  if  their  estimates  show  that  the 
interest  can  be  paid,  and  their  current  expenses  can  be 
kept  within  current  receipts,  without  an  increase  of  tax- 
ation. To  meet  war  expenses,  or  other  extraordinary 
demands  upon  their  treasuries,  their  only  recourse  is  to 
borrow.  The  French  rentes  and  the  English  consols  are 
not  payable  at  any  fixed  day;  they  are  what  might 
be  called  interminable  annuities.  The  interest  is  only 
provided  for,  and  the  indefinite  postponement  of  the 
payment  of  the  principal  increases  instead  of  lessening 
their  market  value.  There  is  a  double  influence  in 
favor  of  the  non-payment  of  the  principal  of  the  public 
debts  of  solvent  nations,  the  indisposition  or  the  ina- 
bility of  the  governments  to  curtail  expenses  or  to  in- 
crease taxes,  and  the  unwillingness  of  investors,  who 
are  usually  a  very  influential  class,  to  have  their  securi- 
ties redeemed.  Either  influence  is  strong  by  itself; 
combined,  the}^  are  sufficient  to  secure  the  perpetuation 
of  most  national  debts.  The  United  States  is  the  only 
solvent  nation  in  which  these  influences  are  not  prevalent 
and  controlling.  Nobody  expects  that  the  debt  of  Great 
Britain  or  of  France  will  ever  be  paid  or  considerably  re- 
duced; the  tendency  is  towards  increase  rather  than 
diminution.  They  are  to  remain  never-ending  if  not 
steadily  increasing  national  burdens.  That  they  are  bur- 
dens, and  heavy  burdens,  ought  not  to  be  questioned, 
and  yet  the  correctness  of  this  statement  is  sometimes 
denied  by  intelligent  persons.  There  are,  it  is  admitted, 
alleviations  in  national  debts  in  national  growth,  and  in 
the  use  of  national  securities,  but  they  are  alleviations 
only.  It  is  admitted  that  the  wealth  of  the  most  heavily 
indebted  solvent  nations  has  more  than  kept  pace  with 
their  debts.  Thus  the  percentage  of  debt  charge  upon 
the  national  income  in  Great  Britain  and  France  is  less 
now  than  it  was  at  the  commencement  of  the  present 
century,  when  their  debts,  in  comparison  w^ith  what  they 
are  now,  were  quite  insignificant.  Rapid  as  has  been 
the  increase  of  their  debts,  their  increase  of  wealth  has 


292 

been  still  more  rapid;  but  for  this  increase  of  wealth  the 
debts  could  not  have  been  contracted;  they  would  have 
been  insupportable  long  before  they  had  reached  their 
present  magnitude.  This  increase  of  wealth  with  the 
increase  of  debt  is  w^ell  illustrated  in  France.  At  the 
close  of  the  First  Empire,  the  assignats  having  been  re- 
pudiated, and  Napoleon  having  been  able  to  support  his 
armies  by  levies  upon  the  nations  he  conquered,  the 
debt  of  France  amounted  to  only  three  hundred  and 
fifty  millions  of  dollars.  From  this  small  beginning  it 
went  on  increasing  under  the  Bourbons,  the  Orleanists, 
the  Republic,  the  vSecond  Empire,  until  at  the  close  of 
the  late  war  with  Germany,  it  had  been  rolled  up  to  not 
less  than  thirty-five  hundred  millions  of  dollars.  Dur- 
ing this  period  she  had  been  engaged  in  wars,  costly  in 
money  as  well  as  in  men,  and  had  been  deprived  of  two 
of  her  wealthy  provinces,  and  yet  the  percentage  of  the 
charge  of  her  debt  upon  her  income  is  less  than  it  was 
when  her  debt  was  not  a  tenth  part  of  what  it  now  is. 
Her  debt,  vast  as  it  is,  is  the  property  of  her  own  peo- 
ple, and,  with  the  exception  of  Belgium,  she  is  at  the 
present  time  the  most  prosperous  country  in  Europe. 
All  this  does  not,  however,  invalidate  the  statement  that 
national  debts  are  national  burdens.  France  as  a  na- 
tion is  not  oppressed  by  her  debt,  because  it  is  a  home 
debt,  and  because  her  people  excel  all  others  in  industry 
and  thrift.  Still  it  is  a  burden  upon  her  resources,  and 
can  never  be  otherwise;  she  is  prosperous  in  spite  of  it. 
Her  prosperity  would  be  much  greater  if  she  were  re- 
lieved of  it.  There  are  also  undoubtedly  alleviations 
of  the  debts  of  solvent  nations  in  the  use  which  is  made 
of  them.  They  are  capital  in  the  hands  of  those  who 
hold  their  obligations;  hence  the  influence  in  favor  of 
their  perpetuation.  So  strong  is  this  influence  that  the 
French  Government  hesitates  to  reduce  the  rate  of  in- 
terest upon  its  public  debt. 

The  opinion  that  debt  in  any  form  could  be  capital 
was  criticised  and  ridiculed  in  his  valuable  treatise  upon 
Political  Economy  by  Mr.  Amasa  Walker,  a  gentleman 
whom  I  held  in  high  esteem  and  to  whom  I  was  greatly 
indebted  for  the  support  which  he  gave  me  when  I  held 
a  difficult  and   trying  position,     According  to  Mr.  Wal- 


298 

ker's  definition,  "  capital  is  the  accumulation  of  labor." 
This  definition  is  not  quite  broad    enough,  but  I  admit 
its  general  correctness.     What  a  man  earns  more  than 
he  spends  is  his  capital,  but  does  it  cease  to  be  capital 
when  he  makes  a  judicious  investment  of  it  in  public  or 
private  securities  ?     The   manufacturer  invests  his  sur- 
plus earnings  in  the   improvements  of  his  machinery,  in 
additions  to  his  stock,  or  in  enlarging  his  factory  in  order 
that  his  business  may   be   more   profitable;  the  .farmer 
uses  his  surplus  gains  in  adding  to  his  acreage  or  in  the 
better  cultivation  of  his  lands,  by  which  they  are  made 
more  productive,  and  thus  increases  his    capital  by  the 
judicious  use  of  his  gains.   Kow,  if  instead  of  making  such 
uses  of  their  earnings  or  gains,  as  I  have  indicated,  they 
invest  them  in  notes  and  mortgages,  Government  bonds, 
or  other  kinds  of  interest-bearing  and  solvent  securities, 
do   they    by    so  doing   sink    their    capital,    or   do  they 
merely  change  the  form  of  it  ?    The  laborer  puts  a  portion 
of  his  daily  wages  in  a  well- managed  savings  bank,  and 
thereby  becomes,  to  the  extent  of  his  savings,  a  capital- 
ist.    His  means  are  the   accumulation  of  his  labor,  the 
bank  is  his  debtor,  the  debt  due  from  the  bank  is  his 
capital.     If,  instead  of  so  depositing  his  money,  he  lends 
it  to  his  neighbor  on  reliable   security  or  invests  it  in 
Government  bonds,  does  he  part  thereby  with  his  cap- 
ital?    May  he    not   by  doing   so    be    taking  the  surest 
means  of  adding  to  it  ?     It  is  the  business  of  a  bank  to 
lend  money.     Its  capital  consists  of  the  accumulation  of 
labor,  or  of  labor  and  capital  combined;  does  it  cease  to 
be   capital   when   it  is  loaned    and  transferred  into  the 
bills  and  notes  of  its  customers  ?     It  seems  to  me  to  be 
unquestionable    that    the  debt   of  one    man   may  be  the 
capital  of  another;  that   the   interest-bearing  debt  of  a 
solvent  State  is  capital  to  the  holders  of  the  evidences 
of  it.     Mr.  Walker,  in  speaking  of  United  States  bonds, 
said  that,  "  they  being  good   securities,  the  holder  can 
exchange  them  for  cash,  and  with  this  can   obtain  any 
description  of  capital  he  may  need;  that  the   bonds  are 
not    capital,    but  only  the   security  upon  which   capital 
may  be  had;  that  they  have  no  elements  of  capital  about 
them."     I  should  say,  on  the  contrary,  that  these  bonds 
cannot  only  be  converted  into  cash,  which  is  capital,  but 


2U 

that  the}^  were  purchased  with  cash,  which  was  capital, 
and  that  the  cash  did  not  cease  to  be  capital  b^^  being  in- 
vested in  them.  The  bonds  of  the  Government  of  the 
United  States  represent  nothing  but  debt;  debt  created 
for  the  pajmient  of  soldiers  and  sailors  who  were  en- 
gaged in  the  work  of  destroying  property  and  life,  or 
for  the  purchase  of  war  material  which  perished  in  the 
using,  and  yet  these  bonds,  being  the  obligations  of  a 
solvent  nation,  are  capital  to  the  holders.  The  three 
thousand  million  dollars  of  debt  that  existed  against  the 
Government  at  the  close  of  the  war  represented  but  a 
part  of  its  cost.  The  waste  of  property  and  the  diver- 
sion of  labor  from  industrial  pursuits  amounted,  doubt- 
less, to  as  much  more.  In  a  pecuniary  point  of  view, 
the  United  States,  to  say  nothing  of  the  loss  of  property 
in  the  slaves  liberated  by  the  emancipation  proclama- 
tion of  Mr.  Lincoln,  and  made  forever  free  by  the  result 
of  the  war  and  the  amendments  of  the  Constitution, 
were  at  least  six  thousand  millions  of  dollars  poorer  than 
they  would  have  been  if  there  had  been  no  war,  and 
yet,  as  the  solvency  of  the  Government  is  undoubted, 
its  outstanding  bonds,  now  happily  reduced  to  less  than 
$2,000,000,000,  and  which,  as  far  as  the  Government  is 
regarded,  represent  debt  only,  are  some  $2,000,000,000 
of  capital  in  the  hands  of  those  who  are  so  fortunate  as 
to  be  the  owners  of  them.  It  is  the  fact  that  national 
debts  are  capital,  and  productive  capital  to  those  who 
hold  the  national  securities,  which  causes  them  to  be  re- 
garded with  favor,  to  be  looked  upon  not  as  a  charge 
upon  the  national  resources,  but  as  obligations  devised 
especially  for  the  benefit  of  those  who  have  money  to 
invest  and  desire  to  live  upon  the  interest.  Many  En- 
glishmen take  this  view  of  the  British  debt;  they  call  it 
the  FUNDS,  and  seem  to  look  upon  it  as  if  it  were  an  evi- 
dence of  their  country's  wealth.  This  idea,  or  senti- 
ment, or  whatever  it  may  be  called,  is  beginning  to  show 
itself  in  the  United  States,  and  it  will  spread  and  deepen 
as  the  Government  bonds  are  more  widely  and  gener- 
ally distributed;  that  no  other  kind  of  security  is  regarded 
with  equal  favor,  is  proved  by  the  rapidity  with  which 
the  four  per  cents,  have  been  recently  taken.  Four  per 
cent,  is  a  low  rate  of  interest  in  the  United  States — lower. 


^95 


probably,  than  will  be  the  ruling  rate  in  years  to  come, 
and  yet  investors,  small  and  large,  savings  banks  and 
trustees  of  estates,  have  been  putting  their  money  into 
these  bonds  in  preference  to  investing  it  in  other  secu- 
rities bearing  a  higher  rate  of  interest.  It  is  not  strange, 
therefore,  that  many  of  our  own  people  begin  to  regard 
the  national  debt  as  being,  if  not  exactly  a  blessing,  at 
least  a  convenience.  It  is,  however,  a  burden,  and  it 
will  never  cease  to  be  until  paid.  There  are  ameliora- 
tions of  it,  and  there  are  benefits  in  the  use  which  is 
made  of  it,  but  these  only  partially  offset  its  evils.  The 
interest  upon  it  is  drawn  from  the  people  by  taxes  in  the 
collection  of  which  thousands  of  men  are  constantly  em- 
ployed. In  a  report  which  I  made  to  Congress  in  1S65, 
when  the  debt  had  reached  its  maximum  and  the  policy 
of  the  Government  in  the  treatment  of  it  was  to  be  es- 
tablished, I  used  the  following  language: 

The  pubUc  debt  of  the  United  States  represents  a  portion  of 
the  accumulated  wealth  of  the  country;  while  it  is  a  debt  of  the 
nation  it  becomes  the  capital  of  the  citizen.  The  debt  is  large, 
but  if  kept  at  home,  as  it  is  desirable  it  should  be,  with  a  judi- 
cious system  of  taxation,  it  need  not  be  oppressive.  It  is,  how- 
ever, a  debt.  While  it  is  capital  to  the  holders  of  the  securi- 
ties, it  is  still  a  national  debt,  an  encumbrance  upon  the  na- 
tional estate.  Neither  its  advantages  nor  its  burdens  are,  or 
can  be,  shared  or  borne  equally  by  the  people.  Its  influences 
are  anti-republican.  It  adds  to  the  power  of  the  Executive  by 
increasing  federal  patronage;  it  must  be  distasteful  to  the  peo- 
ple, because  it  fills  the  country  with  informers  and  tax  gath- 
erers; it  is  dangerous  to  the  public  virtue,  because  it  involves 
the  collection  and  disbursement  of  vast  sums  of  money,  and 
renders  rigid  national  economy  impossible;  it  is,  in  a  word,  a 
national  burden,  and  the  work  of  removing  it,  no  matter  how 
desirable  it  may  be  for  individual  investment,  should  not  long 
be  postponed. 

Since  that  report  was  made  I  have  had  some  opportu- 
nities for  observing  the  operation  of  national  debts  in 
other  countries,  and  my  observations  have  confirmed 
the  correctness  of  the  opinion  which  I  expressed  thir- 
teen years  ago,  and  which  then  pervaded  the  countr3^ 
Before  our  civil  war  it  was  the  boast  of  the  citizens  of 
the  United  States  that  they  had  no  national  debt  hang- 
ing over  them  to  oppress  them  with  taxes  or  to  annoy 
them  with   tax-gatherers.     It  may  be  desirable    that  a 


296 

portion  of  our  national  debt  should  remain  unpaid.  A 
certain  amount  of  Government  bonds  ma}^  be  required 
to  secure  the  notes  of  the  national  banks  and  for  the  pro- 
tection of  legal  trusts,  but  I  am  sure  that  the  best  in- 
terests of  the  people,  financial  and  political,  will  be 
subserved  by  a  stead}'  adherence  to  the  policy,  which 
has  been  pursued  since  the  war,  of  gradually  reducing 
the  public  debt  until  it  has  been  substantially  extin- 
guished. I  mistake  the  character  of  the  tax-payers  of 
the  United  States  if  they  would  not  submit  more  cheer- 
fully to  taxes  levied  to  gradually  reduce  the  principal 
of  the  debt  than  they  would  to  taxes  somewhat  lighter, 
but  imposed  only  for  the  payment  of  the  interest.  I 
have  heard  commendations  of  national  debts  on  the 
ground  of  their  being  conservative  in  their  influence, 
preventives  of  revolution.  Conservative  in  this  respect 
they  may  be,  but  conservative  of  despotism  rather  than 
liberty.  Good  governments  need  no  such  cementing 
influence;  bad  ones  are  rendered  more  oppressive  by  it. 
A  government  that  needs  for  its  support  the  consolidat- 
ing power  of  public  debt  is  not  worth  preserving.  May 
we  not  indulge  the  hope  that  the  future  historian  of  the 
United  States  will  be  able  to  say  that  between  1861  and 
1865  the  Government,  in  a  successful  and  expensive 
struggle  to  preserve  its  existence  and  rightful  authority, 
contracted  a  debt  of  three  thousand  millions  of  dollars, 
and  relieved  itself  of  the  burden  according  to  the  letter 
and  spirit  of  its  contract  before  the  expiration  of  the 
century,  and  thereby  rendered  itself  exceptional  and 
illustrious  among  the  nations  ? 

FOREIGN    EXCHANGE. 

By  foreign  exchange  is  meant  the  debts  due  from  the 
people  of  one  country  to  the  people  of  another  and  the 
instrumentalities  in  use  for  transferring  and  adjusting 
them.  These  instrumentalities  are  bills  of  exchange 
which,  in  the  performance  of  the  duties  for  which  they 
are  required,  become  so  interwoven  with  debts  that  in 
treating  of  foreign  exchange  it  is  difficult,  if  not  impos- 
sible, to  separate  them.  It  must  be  borne  in  mind,  how- 
ever, that  although  they  become  intermingled  they  are 
entirely  different  in   character.     Foreign  debts,  which 


297 

are  not  national  debts,  are  debts  due  from   the  inhab- 
itants of  one   country  to  the  inhabitants  of  another,  and 
payable  where  the  creditors  reside;  bills  are  the  agency 
by  which   these  debts  are   transferred   or  offset  without 
transmission  of  coin  from  one  country  to  another.     The 
necessity  for  the  use  of  bills  in   money  and  trade  trans- 
actions between  different  countries  becomes    apparent 
by  a  simple  illustration.     Let  us  suppose   A  B,  of  Bos- 
ton, to  be   a  purchaser  of  goods  in  Manchester  where 
C  D,  of  Boston,  is  a  seller  of  cotton.     The  latter  has,  as 
the  proceeds  of  the  sale  of  his  cotton,  money  in  the 
hands  of  his  consignee  or  banker  which  he  wants  to  use 
not   in    Manchester,  but   in    Boston.     The    former   has 
money  in  Boston  which  he  wants  to  use  in  Manchester 
to  pay  for  the  goods  he  has  purchased  there.     Now,  un- 
less some   arrangement  can  be  made  between  them,  C 
D  must  order  his  money  to  be   remitted  to  Boston,  and 
A  B  must  send  his  to  Manchester,  both  of  which  remit- 
tances would   be  expensive.     To  obviate  this  A  B  goes 
to  C  D  and  hands  him   the  money  which   C  D   needs  in 
Boston,   and  receives  from   him  a  bill   on   Manchester 
with  which  he  pays  for  his  goods.     A  single  transaction 
of  this  kind  would  be  troublesome;  numerous  transac- 
tions would  be  impossible;  hence  there  arises  a  neces- 
sity for  the  services  of  a  banker,  whose  business  it  is 
both   to  buy  and   sell  bills   of  exchange,  to  whom  C  D 
can  sell  his' bill  for  the  proceeds  of  the  sales  of  his  cot- 
ton, and   from   whom   A   B  can   purchase   a  bill  for  the 
payment  of  his  goods.     When   the  persons  who  are  en- 
gaged in  foreign  trade  live  in  different  countries  the  need 
of  the  agency  of  bankers  in  both  countries  becomes  ap- 
parent.    A  inanufacturer  in   Manchester,  who  has  sold 
his  goods  to  an  importer  in  New  York,  needs  a  banker 
in   Manchester  or   London   who  can   cash    the   bills  he 
draws  for  the  price  of  the   goods;  so  a  cotton  merchant 
in  New  York,  who   receives   an  order  for  cotton  from  a 
Manchester  manufacturer,  needs  a  banker  in  New  York 
to  whom  he  can  sell  the  bill  which  he  draws  against  the 
cotton.     Trade  between  countries  is  not  only  facilitated 
by  bills  of  exchange,  but  its   existence   upon   a  large 
scale  depends  upon  them,  and  with  the  necessity  for 
bills  arises  the  necessity  for  bankers  in   whose  integrity 


^Q^ 


and  solvenc}'  entire  reliance  can  be  placed.  Foreign 
trade  is  substantially  barter,  an  exchange  of  commodi- 
ties covered  by  exports  and  imports.  The  amount  of 
such  exchange  is  enormous,  and  they  are  effected  chiefly 
through  the  agency  of  bills;  hence  the  indispensable- 
ness  of  this  agency. 

If  the  metallic  currency  of  countries  that  trade  with 
each  other  were  the  same,  the  exchanges  betw^een  them 
w^ould  be  easy;  the  par  of  exchange  between  them 
would  be  the  proportion  of  bullion  expressed  in  their  re- 
spective coins.  Although  there  are  in  the  United  States 
three  kinds  of  legal  tender,  the  exchanges  between  the 
United  States  and  Great  Britain  are  regulated  b}'  the 
gold  standard.  The  mint  value  of  the  sovereign  or 
pound  sterling,  as  I  stated  in  a  previous  lecture,  is 
^4.86"'^'  in  United  States  gold  coin,  hence  this  is  theo- 
retically, but  not  exactly,  the  par  of  exchange  between 
the  United  States  and  Great  Britain.  The  variations 
w^hich  we  notice  in  the  quotations  of  sterling  exchange 
indicate  the  activity  or  inactivity  of  the  demand  result- 
ing from  present  causes.  When  sterling  exchange  is 
high,  that  is,  when  bankers'  sight  bills  are  considerably 
above  the  par  of  $4,861*"'*'',  ^ve  know  that  there  is  more 
than  an  ordinary  demand  on  the  part  of  importers  and 
others  for  money  in  P^urope.  \Yhen  such  bills  are  sell- 
ing at  $4.86""^-  or  below,  we  know  that  there  is  no  special 
demand  for  them  and  that  the  market  is  dull.  So  large, 
however,  is  the  trade  of  the  United  States  with  foreign 
nations,  in  which  trade  the  agency  of  sterling  bills  is 
required,  that  there  is  not  a  business  day  in  the  year  in 
which  there  are  not  large  transactions  in  them.  When 
there  is  an  active  demand  for  sterling  bills  in  New  York, 
we  see  them  quoted  at  rates  considerable  above  $4.86^"^'^, 
the  mint  value  of  the  sovereign,  and  it  may  be  asked 
how  such  rates  are  maintained.  They  can  onl}-  be  main- 
tained up  to  a  certain  point,  which  is  called  the  ship- 
ping point — the  point  at  w^iich  gold  can  be  profitably 
remitted  to  London.  While  the  pound  sterling  is  worth 
at  the  United  States  mint  |;4.86>'^^^  it  costs  something  to 
send  it,  or  its  equivalent,  in  gold  to  London.  Freight 
and  insurance  are  to  be  considered  before  it  can  be  de- 
termined whether  gold  will  bear  shipment.    Then  again, 


^99 

gold  coins  are  subject  to  abrasion.  Even  the  double 
eagles  which,  not  being  much  in  current  use,  suffer  less 
in  this  respect  than  the  smaller  coins,  and  which,  except 
in  extraordinary  cases,  are  the  only  United  States  coins 
sent  abroad,  do  not  in  England  come  quite  up  to  their 
value  at  home.  Sterling  exchange  must  therefore  ad- 
vance considerably  above  $4.86''-'"  before  coin  will  be 
shipped.  Double  eagles  cannot  be  taken  to  England  at 
a  less  cost  than  from  a  half  to  three-fourths  of  one  per 
cent.,  and  as  loag  as  sterling  bills  can  be  obtained  at 
under  $4.90  to  the  pound,  gold  will  not  leave  the  United 
States.  It  may  be  said,  therefore,  that  the  variations 
in  the  exchanges  between  nations  having  the  same 
standard  of  value  are  controlled  by  the  cost  of  transfer- 
ring standard  coin  from  one  nation  to  another.  Thus 
coin  is  not  only  a  regulator  of  trade,  but  it  governs  the 
rate  of  international  exchange.  It  is  trade  balances 
which  make  coin  transfers  necessary.  If  trade  between 
nations  were  carried  on  by  an  equal  exchange  of  com- 
modities, there  would  be  no  balances  to  be  settled  in 
coin,  but  this  is  never  the  case.  The  accounts  of  inter- 
national trade  are  never  even,  and  when  settlements  are 
to  be  made,  and  payments  cannot  be  postponed,  coin  is 
indispensable  for  the  purpose. 

.Some  nations  get  so  deeply  in  debt  that  the}^  become 
unable  to  pay,  and  they  either  become  bankrupt,  as  is 
the  case  with  Mexico,  Turkey,  and  Egypt;  or,  having 
good  credit,  they  adjust  the  balances  against  them  by 
sales  of  their  securities,  as  has  been  frequently  done  by 
Russia.  What  are  called  foreign  loans,  therefore,  have 
much  to  do  with  the  settlement  of  balances  and  the 
changing  of  the  natural  current  of  exchange.  Ex- 
change is  sometimes  against  a  creditor  nation  and  in 
favor  of  its  debtor.  Brazil,  for  instance,  although  im- 
mense in  extent  and  rich  in  undeveloped  resources,  is 
still  a  poor  countr}^  and  at  times  a  large  borrower.  She 
meets  the  interest  on  the  money  she  has  borrowed 
promptly,  no  matter  at  what  cost.  Her  credit  is  there- 
fore good,  and  her  securities  are  regarded  with  favor 
where  they  are  known  and  held.  She  offers,  through 
her  London  agents,  the  Messrs.  Rothchilds,  five  mil- 
lions sterling  of  her  bonds  to   the  public,   which  are 


soo 


readily  taken,  and  thus,  although  she  is  in  debt  to  the 
same  public  for  ten  times  the  amount  on  loans  previousl}' 
made,  but  which  are  not  due,  she  becomes,  by  being  a 
borrower,  a  creditor;  temporarily,  it  is  true,  but  still  a 
creditor  of  the  nation  she  borrows  from.  The  mone}^ 
she  borrows  is  needed  for  immediate  use  in  Brazil;  the 
debts  she  has  contracted  are  payable  at  a  future  da}^ 

We  have  an  illustration  of  the  uses  to  which  Govern- 
ment securities  can  be  put  in  adjusting  balances  in  our 
own  recent  financial  history.  Between  t86i  and  1873 
large  amounts  of  United  States  Government  and  cor- 
poration bonds  were  sold  in  Europe.  We  have  no  means 
of  knowing  the  exact  amount,  but  it  was  probably  not 
less  than  five  or  six  hundred  millions,  the  proceeds  of 
wdiich  sales  were  used  in  the  purchase  of  articles  needed 
in  the  prosecution  of  the  war,  in  the  construction  of  rail- 
roads, and  for  the  supply  of  the  wants,  real  or  imaginary, 
of  an  extravagant  people.  These  bonds  answered  the 
purpose  of  ordinary  exports,  and  kept  exchange  on  Lon- 
don down  to.  and  sometimes  forced  it  below,  the  stand- 
ard rates.  So  that  while  the  outflow  of  specie  was  gen- 
erally steady,  small  amounts  were  occasionally  returned 
to  equalise  exchanges.  Singularly  enough,  the  same 
bonds  have  been  made  to  perform  a  double  purpose. 
They  were  exported  to  pay  for  European  goods.  Some 
of  them  have  come  back  again  to  pay  for  productions  of 
the  United  States.  They  equalized  exchanges  when 
the  balances  were  against  this  country.  The}'  have 
been  doing  the  same  thing  when  the  balances  were  in 
its  favor. 

Since  the  laying  of  the  Atlantic  cable  electricity  has 
come  into  very  important  use  in  the  business  of  foreign 
exchange.  Transactions  to  the  amount  of  many  thou- 
sands of  dollars  are  daily  effected  between  our  Atlantic 
cities  and  London,  by  what  are  called  "cables."  Bank- 
ers on  one  side  of  the  Atlantic  have  a  key  which  is  onl}^ 
understood  b}^  their  correspondents  on  the  other  side, 
and  by  the  use  of  a  half  dozen  words  or  less  large 
amounts  are  transferred  from  a  man  in  the  United  States 
to  a  man  in  Europe,  or  from  one  in  Europe  to  one  in  the 
United  States,  with  as  much  sureness  and  safety  as  if 
remittances   were   made   in    coin   b}'   steamships  or  by 


301 


bills  of  exchange.  If,  therefore,  a  merchant  in  Boston 
desires  to  make  a  purchase  or  pay  a  debt  in  London, 
instead  of  buying  a  bill  of  exchange  for  this  purpose,  he 
can  go  to  a  banker  and  buy  a  "cable."  He  has  noth- 
ing to  do  with  making  the  transfer.  He  niereh^  says  to 
the  banker  that  he  wants  a  certain  sum  placed  in  the 
hands  of  a  person  whose  name  and  address  he  gives. 
The  banker  immediately  instructs  his  correspondent  to 
pay  the  amount  to  the  person  named,  and  the  transaction 
is  at  once  accomplished.  So  reliable  has  this  means  of 
transfer  become,  that  payments  to  be  made  in  the  com- 
mercial cities  of  Europe,  by  debtors  in  the  United  States, 
can  safely  be  postponed  until  the  evening  before  the  da}^ 
they  become  due.  When  payments  are  to  be  made  on 
this  side  of  the  Atlantic  so  much  more  rapidly  does  elec- 
tricity move  than  the  earth,  that  a  debtor  living  in  Lon- 
don or  Paris  may  use  his  money  until  three  o'clock  in 
the  afternoon  and  have  the  debt  which  he  owes  paid  in 
Boston,  or  New  York,  or  Philadelphia,  or  Baltimore,  or 
New  Orleans,  or  vSan  Francisco,  the  same  day  and  by  the 
use  of  the  same  money.  All  great  commercial  cities  are 
now  united  by  cables  and  land  lines  of  telegraph,  so  that 
remittances  can  be  made  in  this  way  all  over  the  world. 
Credits  on  London  can  be  opened  by  bankers  in  the 
United  States,  through  their  London  correspondents,  to- 
day, under  which  goods  may  be  purchased  in  Yokohoma, 
Bombay,  Calcutta,  or  Ceylon  to-morrow.  Electricity 
has  thus  become  one  of  the  time-saving  and  interest- 
saving  agencies  of  the  day.  To  such  an  extent  is  the 
ability  to  make  transfers  of  money  by  telegraph  relied 
upon — so  important  are  the  transactions  dependent  upon 
daily  communications — that  a  break  in  the  Atlantic 
cables  would  discredit,  if  it  did  not  ruin,  scores  of  bank- 
ing and  commercial  houses,  and  send  confusion  into 
hundreds  of  counting  rooms. 

While  the  business  of  foreign  exchange  between 
nations  having  the  same  standard  of  value  is  simple  and 
easily  conducted,  it  would  be  complicated  and  difficult 
when  the  transactions  are  between  nations  having  differ- 
ent standards,  were  it  not  for  the  relations  of  these 
nations  to  Great  Britain.  There  is  no  difference,  or  so 
slight  a  difference  that  it  is  unimportant,  in  the  price  of 


302 


gold  as  bullion,  in  nations  where  gold  is  the  standard,  or 
where,  if  the  double  standard  exists,  gold  is  in  use  in  all 
international  transactions,  so  that  bankers  who  deal  in 
foreign  exchange  have  a  reliable  basis  upon  which  they 
can  work  in  dealings  with  such  nations.  But  there  are 
other  nations  in  which  there  is  no  stable  measure  of 
value — in  which  fluctuations  are  so  sudden  that  they 
cannot  be  foreseen  or  guarded  against.  Exchange  trans- 
actions with  Oriental  nations  where  silver  is  the  stand- 
ard, or  with  Russia  or  Italy,  where  paper  is  chiefly  in 
use,  or  with  Brazil  and  Buenos  Ayres,  w^here  gold  and 
silver  are  practically  unknown,  could  only  be  carried  on 
with  considerable  risk,  were  it  not  for  the  fact  that  all 
these  nations  are  in  debt  to  Great  Britain,  and  that  in 
consequence  thereof  there  is  a  constant  demand  in  them 
for  sterling  bills.  Such  transactions  can,  therefore,  be 
carried  on  with  these  nations  without  risk  to  the  bankers 
who  furnish  the  bills  or  to  those  who  use  them.  I^ondon 
has  necessarily  become  the  clearing-house  of  interna- 
tional exchanges.  There  is  not  a  place  in  the  world 
where  foreign  trade  is  carried  on,  in  which  bankers'  bills 
on  London,  or  bills  drawn  under  London  credits,  are  not 
available  and  in  demand.  If,  therefore,  a  merchant  in 
the  United  States  desires  to  purchase  silk  in  China,  or 
coffee  in  Rio,  or  guano  in  Peru,  or  hides  in  Buenos 
Ayres,  he  does  not  send  money  to  these  countries,  but 
he  goes  to  some  banker  and  obtains  from  him  a  letter  of 
credit  authorizing  him  or  his  agent  to  draw  for  the 
amount  named  therein  on  some  banking  house  in  Lon- 
don whose  reputation  is  established  in  the  place  where 
the  credit  is  to  be  used.  The  bills  drawn  under  this 
credit  are  sold  for  the  currency  of  the  country,  and  with 
this  currency  purchases  are  made.  To  obtain  such  a  let- 
ter of  credit  the  merchant  either  deposits  money  with 
the  banker  or  he  gives  him  satisfactory  security  that  he 
will  put  him  in  funds  to  cover  the  bills  drawn  by  the  au- 
thority of  the  credit,  before  they  are  payable,  together  with 
the  banker's  commission,  usually  about  one  per  cent., 
which  is  divided  between  the  banker  who  issues  the  credit 
and  the  banker  who  accepts  the  bill.  These  credits  are  of 
two  kinds.  They  are  either  what  is  called  clear  credits, 
that  is,  credits  which  authorize  drafts  to  be  drawn  with- 


303 


out  conditions,  or  documentary  credits,  which  require 
that  the  drafts  drawn  under  them  shall  be  accompanied 
by  bills  of  lading  and  policies  of  insurance  covering  the 
property  purchased  with  the  proceeds  of  the  drafts, 
which  property  the  acceptor  takes  possession  of  on  its 
arrival,  and  sells,  through  a  broker,  for  the  account  of 
the  drawer.  Bills  of  exchange  drawn  under  such  credits, 
whether  clear  or  documentary,  are  usually  payable  sixty 
or  ninety  days  or  four  months  after  sight,  it  being  the 
desire  of  those  to  whom  the  credits  are  given  that  the 
time  may  be  long  enough  to  allow  property  to  be  pur- 
chased, shipped,  and  sold  before  the  bills  mature;  and  it 
so  turns  out  that  very  large  transactions  are  completed 
in  this  way  by  credit  alone,  and  without  any  cash  ad- 
vances. The  rates  of  interest  are  generally  very  low  in 
London,  and  there  are  discount  houses  there  which  are 
always  prepared  to  discount  London  bankers'  accept- 
ances on  the  most  favorable  terms,  so  that  the  holders 
have  no  difficulty  in  obtaining  the  money  on  them  before 
their  maturity.  Credit  is  the  life  blood  of  commerce  and 
trade;  to  none  is  it  more  important  than  to  bankers,  and 
by  none  more  judiciously  used.  To  deal  advantageously 
in  foreign  exchange  bankers  must  have  the  highest 
reputation  for  capital  and  integrity.  With  such  a  repu- 
tation, their  ability  to  use  their  credit  is  practically 
unlimited. 

Americans  who  intend  to  travel  in  other  countries, 
generally,  instead  of  taking  gold  with  them,  provide 
themselves  with  what  are  called  "travelers'  letters  of 
credit,"  issued  by  well-known  bankers,  authorizing  them 
to  draw  for  the  amount  named  in  such  letters  upon  the 
correspondents  of  the  bankers  in  London  or  Paris, 
usually  upon  the  former,  as  bills  on  London  are  in  de- 
mand everywhere.  These  letters  give  the  names  of  the 
banker's  correspondents,  not  only  in  all  the  principal 
cities  of  Europe  but  of  Asia  also,  who  will  cash  the 
drafts  drawn  under  them  at  the  current  rate  of  ex- 
change. Provided  with  such  letters,  travelers  can  go 
where  they  please,  without  the  risk  and  trouble  of  taking 
coin  with  them,  and  without  the  losses  to  which  they 
would  be  subject  if  they  were  exposed  to  the  tender 
mercies  of  money  brokers,  in  passing  from  one  country 


304 


to  another.  The  operations  of  large  dealers  in  foreign 
exchange  extend  throughout  the  commercial  world. 
Messrs.  Kidder,  Peabody  &  Co.,  or  Blake  Brothers,  of 
Boston,  for  instance,  are  doubtless  prepared  to  furnish 
drafts  on  all  the  principal  European  and  Asiatic  cities. 
They  do  not  keep  balances  in  the  hands  of  all  the  houses 
upon  which  they  draw.  They  cover  their  drafts  either 
by  direct  remittances  or  by  authorizing  the  houses  which 
cash  them  to  cover  the  amount  by  drawing  on  their  Lon- 
don correspondents,  and  so  well  is  their  credit  estab- 
lished that  their  drafts  are  as  current  as  the  notes  of  the 
Bank  of  England. 

It  is  interesting  to  know  how  debts  due  one  nation  are 
offset  by  debts  which  it  owes  to  another.  The  United 
States,  for  instance,  buy  more  of  Bra/.il  and  China  than 
she  sells  to  them,  and  consequently  is  their  debtor;  and 
yet  no  coin  is  sent  to  Bra'/^il,  and  while  some  silver  goes 
to  China  from  San  Francisco,  the  amount  is  not  sufficient 
to  cover  the  balance  in  her  favor.  The  balances  due 
these  nations  are  paid  not  by  coin,  but  by  exports  to 
other  countries.  Thus  the  United  States  are  indebted  to 
China  and  Brazil,  which  are  debtors  to  Great  Britain; 
Great  Britain  is  in  debt  to  the  United  States,  and  so  by  a 
transfer  by  means  of  bills  of  exchange  the  debt  due  to 
the  United  States  from  Great  Britain  is  made  to  pay  the 
debt  of  the  United  States  to  China  and  Bra/.il.  Thus 
the  cotton  and  wheat  sent  from  the  United  States  to 
Europe  pay  for  the  coffee  which  comes  from  Brazil  and 
the  tea  and  silk  that  comes  from  China.'" 

While,  however,  the  indebtedness  of  one  nation  to  an- 
other may  be  affected  in  the  manner  I  have  named  with 
regard  to  the  United  States,  it  will  be  found  to  be  true, 

*I  was  happy  to  learn  a  day  or  two  ago  from  Mr.  Edward 
Atkinson,  an  excellent  authority  on  all  such  matters,  that  our 
exports  of  cotton  goods  to  China  are  now  nearh-  large  enough 
to  cover  our  purchases. 

"When  I  speak  of  nations  in  regard  to  their  trade  relations,  I 
do  not  speak  of  them  in  their  national  character.  Nations,  as 
nations,  are  not  engaged  in  trade,  nor  are  they  money  lenders. 
There  may  have  been  exceptional  cases  in  which  a  nation  has 
helped  another  to  borrow  by  guaranteeing  its  objections,  but  I 
can  call  to  mind  no  instance  in  which  one  independent  govern- 
raeut  has  been  a  lender  to  another, 


305 

as  a  general  rule,  that  the  nation  that  buys  more  than  it 
sells  will  be  a  debtor  nation,  and  the  one  that  sells  more 
than  it  buys  will  be  a  creditor  nation,  and  that  the  pre- 
vailing current  of  exchange  or  movement  of  coin  will 
clearly  indicate  which  is  creditor  and  which  is  debtor. 

There  is  a  good  deal  of  discussion  going  on  upon  the 
subject  of  international  trade,  and  there  are  some  per- 
sons, not  destitute  of  intelligence,  who  contend  that  not 
only  can  no  reliable  estimates  be  formed  of  the  financial 
relations  of  a  country  with  other  countries,  by  a  com- 
parison of  its  imports  and  its  exports,  but  that  an  excess 
of  imports  indicates  a  healthy  and  profitable  trade.  It 
would  be  difficult,  however,  for  them  to  point  to  any 
country,  except  Great  Britain,  to  which  the  general  rule 
I  have  named  does  not  apply.  Her  position  is  an  excep- 
tional one.  For  many  years  the  imports  of  Great  Britain 
have  largely  exceeded  her  exports,  and  during  these 
years  she  has  been  gaining  steadily,  and  sometimes  rap- 
idly, in  wealth.  This  apparent  anomaly  is  explained  by 
the  fact  that  she  is  the  creditor  nation  of  the  world. 
For  nearly  half  a  century  she  was  the  great  international 
workshop.  Being  the  first  to  utilize  steam  power,  and 
having  an  abundance  of  coal  and  cheap  labor,  the  raw 
material  was  brought  from  all  parts  of  the  world  in  her 
own  ships,  to  be  manufactured  and  distributed  among  the 
nations.  For  many  years  London  was  the  emporium  for 
foreign  goods,  whither  merchants  went  from  all  parts  of 
the  world  to  make  their  purchases,  and  it  has  been  for  a 
long  period,  and  still  is,  the  world's  banking  house.  It 
is  the  interest  on  the  money  she  has  loaned;  the  freights 
of  her  ships;  the  profits  on  her  exports;  the  commissions 
paid  to  her  bankers;  the  use  of  her  capital  in  other  coun- 
tries, that  have  given  to  Great  Britain  the  ability  to  im- 
port more  than  she  exports,  and  yet  continue  to  be  a 
creditor  nation.  The  excess  of  her  imports  represents 
her  income,  which  she  receives  in  the  articles  she  needs 
for  consumption.  There  is  no  other  nation  in  the  world, 
not  even  France,  her  rich  neighbor  (for  France  holds 
but  small  amounts  of  foreign  securities  and  has  little 
foreign  carrying  trade),  whose  imports  could  continually 
exceed  her  exports  without  impoverishment.  Great 
Britain  is  now  undergoing  severe  trials.     In  manufaC' 


306 


uring  she  has  strong  and  active  competitors  on  the  con- 
tinent and  in  the  United  States,  and  consequently  she 
has  a  very  large  amount  of  unproductive  capital  in  mills 
and  factories,  for  much  of  which  there  is  no  employ- 
ment, while  her  efforts  to  meet  this  competition  success- 
fully by  reduction  of  wages  are  in  a  large  measure  ren- 
dered abortive  by  strikes  among  her  laborers.  Her 
Eastern  trade  has  also,  of  late  years,  been  unprofitable. 
She  has  probably  seen  her  most  prosperous  days.  Still 
she  stands  at  the  head  of  the  nations  in  wealth  and  in 
the  extent  of  her  imperial  domain.  She  is  surpassed  by 
no  nation  in  enterprise;  her  government  is  stable  and 
wisely  administered;  her  colonies  encircle  the  globe;  her 
ships  cover  the  sea;  her  credit  is  supreme  everywhere. 
How  long  she  will  be  able  to  retain  her  commercial  and 
financial  ascendency,  time  alone  can  determine.  I  see 
no  indications  that  she  is  soon  to  be  deprived  of  it,  not- 
withstanding the  present  depression  of  her  industries 
and  the  adverse  balance  of  her  imports  over  her  exports, 
amounting  to  sixty  millions  of  pounds  in  1877,  a  balance 
exceeding  the  total  exports  of  the  United  States.  Great 
Britain  is  an  anomaly  among  the  nations;  judged  by  ordi- 
nary rules,  she  ought  long  since  to  have  been  bankrupt. 
The  subject  of  foreign  exchange,  to  which  I  have  thus 
briefly  directed  attention,  is  a  large  and  interesting  one, 
well  worth  the  consideration  of  political  economists,  as 
well  as  of  merchants  and  bankers,  who  are  personally 
interested  in  it. 

DOMESTIC   EXCHANGE. 

Domestic  exchange  was  a  very  interesting  subject  to 
bankers  and  traders  twenty  years  ago.  Since  then  the 
use  for  domestic  bills  has  been  greatly  lessened  by  im- 
proved and  increased  facilities  of  shipping  commodities 
from  one  part  of  the  country  to  another;  by  the  saving 
of  time  in  their  transmission,  and  a  uniform  paper  cur- 
rency. Railroads  are  doing,  to  a  very  large  extent,  what 
used  to  be  done  by  vessels  and  boats.  Days  only  are 
now  required,  instead  of  the  weeks  formerly  consumed, 
in  shipments  from  the  West  to  the  seaboard.  Twenty 
years  ago  the  grain,  the  flour,  the  beef  and  pork  pur- 
chased at  Chicago  and  other  Western  lake  ports  during 


307 


the  winter,  remained  in  store  until  the  opening  of  the 
navigation  in  the  spring,  and  when  shipped  were  from 
thirty  to  forty  days  in  reaching  the  Atlantic  ports.  Now 
such  articles  are  largely  forwarded  in  winter,  and  also  in 
other  seasons  when  navigation  is  open,  by  railroads,  and 
by  reason  of  the  competition  between  the  trunk  lines,  at 
much  less  expense  than  was  formerly  incurred  in  trans- 
portation by  water.  Months  in  the  winter  season,  and 
weeks  at  other  times,  are  thus  saved;  and  sellers  and 
buyers  are  brought  so  closel}^  together  that  the  transac- 
tions betweeh  them  are,  to  a  great  extent,  cash  trans- 
actions, in  which  the  agency  of  bills  is  not  needed. 
While  the  business  in  domestic  bills  has  been  lessened  in 
amount  by  these  causes,  it  has  been  reduced  in  profit  to 
bankers  by  the  uniform  value  of  our  paper  currency. 
Under  the  old  banking  system  bankers'  bills  on  New 
York  commanded  throughout  the  West,  on  a  coin  basis, 
a  premium  of  at  least  one  per  cent.  Except  at  times 
when  there  was  an  extraordinary  demand  for  currency 
in  the  interior,  New  York  exchange  was  more  frequently 
above  one  per  cent,  than  below  it.  I  have  known  as 
high  as  five  per  cent,  premium  to  be  paid  for  bankers' 
drafts  on  New  York  in  the  notes  of  nominall}^  vSpecie- 
paying  banks.  Now  an  eighth  or  a  sixteenth  is  all  that 
can  be  obtained  for  them.  Under  the  State  bank  system 
there  were  very  few  interior  banks  whose  notes  were  not 
at  a  discount  not  only  in  New  York,  but  in  all  the  sea- 
board cities.  The  country  banks  of  New  England  kept 
their  notes  at  par  in  Boston,  and  a  few  of  the  banks  of 
the  State  of  New  York  redeemed  theirs  in  the  city,  but 
three-quarters  of  the  notes  of  what  were  regarded  as  be- 
ing solvent  banks  throughout  the  Union,  were  uncurrent 
in  the  Eastern  cities.  Hence  there  was  a  constant  and 
large  demand  for  bankers'  bills  on  the  part  of  Western 
and  Southern  merchants,  who  had  purchases  to  make  or 
debts  to  pay  in  the  Eastern  cities,  on  which  bills  the 
bankers  made  a  handsome  profit.  Such  bills  now  pay 
the  smallest  fraction  over  the  cost  of  forwarding  United 
States  notes  or  national  bank  notes  by  express  com- 
panies, which  have  extended  their  lines  into  every  part 
of  the  country.  While  the  value  of  property  exchanges 
l^etween  the  4iffe^ent  sections  of  the  United  States  has 


308 


been  rapidly  increasing,  the  use  of  bills  in  effecting 
these  exchanges  has  been  rapidly  falling  off.  It  is  hardly 
too  much  to  say  that  the  business  in  domestic  bills,  once 
so  large  and  profitable  to  bankers,  has  been  virtually  de- 
stroyed by  railroads,  a  uniform  currency,  and  express 
companies. 


Sixth  Lkcture. 
taxation. 

My  lecture  this  evening  will  be  a  long  one.  I  wish  I 
could  say  that  it  will  be  interesting,  as  well  as  long. 
Before  proceeding  with  it,  I  desire  to  say  that  in  speak- 
ing, last  Tuesday  evening,  of  the  great  reductions  of  our 
foreign  debt,  I  had  reference  only  to  our  national  debt. 
The  amount  of  Government  bonds  on  the  other  side  of 
the  Atlantic  is  estimated  at  two  hundred  millions  of  dol- 
lars. We  have  no  data  b}^  which  the  exact  amount  can 
be  ascertained,  but  I  am  sure  that  we  shall  not  be  wide 
of  the  mark  if  we  put  it  at  the  figures  I  have  named. 
Whatever  the  amount  may  be,  it  is  not  likely  to  be 
speedily  reduced.  The  credit  of  the  Government  is  now 
so  good  that  our  four  per  cent,  bonds  are  taken  at  a 
premium  in  the  very  country  (Great  Britain)  in  which 
the  six  per  cents,  were  regarded  with  so  much  distrust 
that  none  of  them  were  purchased  until  long  after  very 
liberal  purchases  had  been  made  by  the  Germans,  the 
permanency  of  the  Union  had  become  assured,  and  con- 
siderable progress  had  been  made  in  the  reduction  of  the 
debt.  It  took  the  English  capitalists  much  time  to  real- 
ize the  fact  that  the  rebellion  had  been  crushed,  and  that 
the  bonds  of  the  United  States  were  really  solvent  se- 
curities. Meanwhile  they  were  rapidly  appreciating  in 
market  value,  and  when  the  English  capitalists  began  to 
invest,  they  had  advanced  some  twenty  per  cent,  from 
the  lowest  point. 

In  speaking  of  our  foreign  debt  I  had  no  reference 
whatever  to  the  State,  municipal  or  corporation  bonds 
and  stocks  in  foreign  hands.  The  amount  of  them  must 
be  large,  and  I  am  glad  that  a  very  intelligent  young 
gentleman,  connected  with  this  University,  is  preparing 
a  paper  showing,  as  nearly  as  it  can  be  ascertained,  what 


309 

they  amount  to.  Everything  that  enlightens  us  in  re- 
gard to  our  financial  relations  with  foreign  countries  is 
valuable. 

One  word  more.     I  have  been  surprised  at  the  apathy 
which  I  witness  among  the  intelligent  merchants  of  New 
York  and  Boston  in  regard  to  the  dangers  which  are  yet 
to  be  surmounted   before  really  solid  ground  is  reached. 
They  seem  to  feel,  that   as  the  Government  notes  and 
bank-notes  are  now  at  par  with  gold  there  is  no  reason 
for  apprehension   in  regard  to  the  future;  that  a  smooth 
sea  is  before  them.     They  seem  to  be  unmindful  that  the 
favorable  condition  of   our  foreign   exchanges,  without 
which  specie  payments  would   have  been  impossible,  is 
attributable  to  our  harvests,   which  for  the  last  three 
years  have  been  abundant,  and  to  the  unusual  demand 
for  our  agricultural    productions  in  Europe,  neither  of 
which   advantages  can   be  relied  upon  as  being  perma- 
nent.    They  seem  also  unmindful  of  the  fact  that,  while 
Great  Britain  has  twice  as^  much,  and  France  three  times 
as  much  specie  as  paper  currency,  the  United  States  has 
some  seven  hundred  millions  of  Government  and  bank- 
notes in  circulation,  on  a  basis  of   less  than  three  hun- 
dred millions  of  gold  and  silver.     Nor  do  they  properly 
appreciate  the  very  important  fact  that  a  powerful  party 
is  in  favor  of  further,  if  not  unlimited,  issues  of  United 
States  notes,  and  of  the  free  coinage  of  silver,  without 
reference  to   the  actions  of  European    states,  and   that 
dangerous  legislation   upon  both  these  subjects  by  the 
present  Congress  may  only  be  prevented  by  the  veto  of 
the  President.     I  am  no  alarmist.     I  am  not,  because  I 
have  confidence  in  the  resources  of  the  country  and  in 
the  good  sense  of  the  people.     The  history  of  the  last 
eighteen  years  has  shown  that  there  is  a  latent  power  in 
the  people   of  the  United  States  which  is  equal  to  the 
greatest  emergencies,  but  this  power  to  be  eff"ective  must 
be  active.     There  are  dangers  ahead  which  can  only  be 
escaped  by  the  vigilance  and  earnest  efforts  of  those  who 
have  the  greatest  interests  at  stake.     The  new  constitu- 
tion of  California   shows  the  drift  of  sentiment  in  that 
State  and  may  indicate  danger  nearer  home. 

I  now  proceed  with  my  lecture,  which  will  be  histori- 
cal, and  preparatory  for  the  one  which  is  to  follow. 


310 

taxation  is  a  necessit}-  of  social  and  political  organi- 
zation; commencing  with  government  in  its  simplest 
form,  imposed  in  the  simplest  manner,  it  has  been 
changed  in  character  and  increased  in  burden  with  the 
increasing  demands  of  the  institutions  which  have  de- 
pended upon  it  for  support.  If  public  affairs  had  been 
administered  with  econoni}^  and  wisdom,  and  there  had 
been  no  wars,  taxation  would  not  have  been  grevious; 
the  means  to  pay  would  have  more  than  kept  pace  with 
expenditures.  In  most  countries,  however,  the  burden 
has  been  greatly  disproportioned  to  the  ability  of  the 
people  to  bear  it.  In  many  instances  the  decline  of  na- 
tions has  been  attributable  to  opprCvSsive  taxes.  High 
taxes  retard  progress,  and  even  in  nations  that  are  gain- 
ing steadil}^  in  wealth  and  power,  the}'  weigh  heavily 
upon  the  majority  of  tax-payers. 

Of  all  the  causes  of  national  indebtedness,  and  conse- 
quently of  high  taxes,  war  has  been  the  most  potent. 
The  $20,000,000,000  of  national  debts  now  outstanding 
were  born  of  war. 

The  foundation  of  the  British  debt  in  its  present  form 
was  laid  in  the  latter  part  of  the  seventeenth  century; 
before  that  period  the  English  monarchs  had  borrowed 
money  for  the  support  of  royalty  and  war  expenditures, 
but  their  loans  were  temporary  and  were  either  paid  or 
repudiated  soon  after  they  were  contracted.  Borrowing 
was  difficult  and  expensive  until  the  funding  system  was 
introduced.  It  became  easy  when  public  securities,  the 
interest  upon  which  was  to  be  paid  semi-annually,  be- 
came desirable  for  investmens.  The  debt  of  Great 
Britain  at  the  commencement  of  the  war  of  the  American 
Revolution  had  reached  ^136,000,000.  In  the  forty 
following  years  more  than  ^700,000,000  were  added  to 
it;  and,  although  since  1830  the  debt-paying  power  of 
the  nation  has  been  enormously  increased,  the  debt  has 
been  but  slightly  reduced;  it  is  still  about  ^800,000,000, 
or  $4,000,000,000,  furnishing  in  the  form  in  which  it 
exists  desirable  security  to  those  who  have  money  to  in- 
vest, but  remaining,  and  destined  to  continue  as  long  as 
her  national  existence  continues,  a  fixed  charge  upon 
her  income,  a  burden  upon  her  tax-payers,  a  burden 
which  will  be  more  and  more  severely  felt  if  she  should 


311 

become  crippled  in  her  industries  by  foreign  competition. 
We  need   not,  however,  look  to  other  nations  for  an 
example  of  the   creation  of  a  national  debt  and    an  in- 
crease of  taxes.     At  the  commencement  of  the  late  civil 
war  the  United  States  had   no  national  debt,  or  rather 
none  large  enough  to  be  mentioned  as  such.     By  four 
years'  war,  a  war  necessarily  expensive  by  the   forces 
engaged,  and  rendered   doubly  expensive  by   the  use 
of   a    depreciated    currency,   a   debt   was    created    sec- 
ond then  only  to  the   debt  of  Great  Britain  in   amount 
and  more  burdensome  than  hers,  by  the  higher  rate  of 
interest  which  it  bore.     Fortunate  was  it  foit  he  people 
of  the   United  States,  unaccustomed  to  a  public  debt, 
that  they  looked  upon  it  as  a  burden  to  be  removed  and 
not  a  blessing  to  be  perpetuated.     In    1791   Sir  Robert 
Peel,  father  of  the  distinguished  Prime  Minister,  pub- 
lished a  pamphlet  in  which  he  undertook  to  prove  that 
a  national  debt  was  a  national  blessing.     I  do  not  know 
how  this  doctrine  was  regarded   by  the  English  people, 
but  when  the  same   doctrine  was  advanced   by  a  promi- 
nent citizen  of  the  United  States  in  1865,  it  was  treated 
with  derision.     If  the  sentiment  of  the  country  should 
change  with  respect  to  the  real  character  of  the  public 
debt,  if  the  tax-payers  should  cease  to  regard  it  as  a 
national  burden  to  be  removed  by  gradual   and  continu- 
ous reductions,  it  will  be  by  the  influence  of  the  holders 
of  the  Government  bonds  and  a  paper  currency.     Not 
only  was  our  national  debt  created  by  the  war,  but  a  vast 
amount  of  individual  and  municipal  indebtedness  (under 
which  latter  head  I  include   the  indebtedness  of  cities,_ 
towns,  counties  and  townships)  was  the  consequence  of 
it.     The  ^arge  expenditures  of  the  Government    in  the 
prosecution  of  the  war,  and  a  redundant  paper  currency 
after  the  war  was  ended,  not  only  gave  an  impetus  and 
activity  to  trade  and  manufacturing,  but   brought  into 
existence  so  many  unwise  and  speculative  enterprises 
and    stimulated    extravagance    to    such    a    degree  that 
municipalities  and  individuals  plunged  into  debt  with  a 
recklessness  beyond  precedent.     A  large  part  of  the  per- 
sonal indebtedness  has  been  wiped  off  by  bankruptcy, 
the  rest  will  be  closed    in  the  same  way,  or  paid  by  the 
gains  which  are  the   certain  results  of  well-directed  in- 


31 S 


diistr}^  and  economy.  The  municipal  debts  remain,  the 
payment  of  the  interest  upon  which  is  testing  both  the 
ability  and  the  honesty  of  the  tax-payers. 

The  revenues  of  the  Government  are  mainly  derived 
from  the  customs  and  excise  duties.  Indirect  taxation 
is  the  most  insidious  and  consequently  the  most  danger- 
ous to  which  the  people  can  be  subjected.  It  is  insidious 
because  it  is  felt  only  in  the  increased  cost  of  articles 
which  are  consumed ;  dangerous  because  it  fails  to  check 
expenditures.  If  the  Government  were  supported  and 
the  interest  upon  the  public  debt  w^ere  paid  by  direct 
taxation,  there  would  be  an  economj^  in  the  use  of  the 
public  money  which  would  be  in  marked  contrast  with 
the  expenditures  under  the  present  system.  Reform  is 
now  in  order.  Municipal  bonds  are  no  longer  regarded 
with  favor,  tax-payers  are  much  more  interested  in  the 
subject  of  taxation  than  the}'  were  when  the  country 
was  apparently  prosperous,  and  we  may  hope  that  exces- 
sive issues  of  paper  money  will  not  long  be  possible. 
How  to  raise  money  for  the  support  of  municipal  govern- 
ments and  the  payment  of  the  interest  on  municipal  debts 
is  the  question  of  present  especial  interest.  Most  of 
these  debts  have  been  contracted  within  the  last  ten 
years.  Of  the  $800,000,000  of  existing  municipal  debts, 
$600,000,000  have  been  contracted  since  1868,  for  only  a 
portion  of  which  is  there  an}-  compensation  in  an  increase 
of  debt-paying  ability.  Some  of  the  debts  were  created 
by  subscriptions  to  railroads,  which  have  never  been 
completed,  or  whose  stock  and  bonds  are  valueless;  some 
b}^  costh'  public  buildings;  some  by  so-called  improve- 
ments of  streets,  now  in  a  worse  condition  than  before 
money  was  expended  upon  them;  some  by  robberies 
committed  by  trusted  officials.  It  is  no  exaggeration  to 
say  that  one-half  of  the  moneys  for  which  municipalities 
are  now  in  debt  has  been  wasted  or  squandered. 

Prior  to  the  war  high  taxes  were  unknown.  The  wis- 
dom required  for  raising  the  largest  revenues  with  the 
least  oppression  to  industrial  pursuits  is  yet  to  be  ac- 
quired. In  most  of  the  States  and  cities  personal  property 
of  every  description,  tangible  and  intangible,  except 
Government  securities,  Government  notes  and  notes  of 
the  national  banks,  is  subjected  to  the  same  rate  of  tax- 


3l3 

ation  as  real  estate,  according  to  its  appraised  value. 
The  intention  of  the  tax-levying  authorities  is  to  prevent 
anything  from  escaping  its  share  of  burdens.  That  most 
of  the  personal  property  does  escape  is  manifest  from 
the  returns  which  are  made  to  the  a.sses.sors.  In  the 
city  of  New  York,  for  instance,  it  is  made  the  duty  of 
every  resident  citizen  to  make  on  or  before  the  first  of 
April  a  return  of  his  personal  property,  including  all  his 
securities,  his  deposits  in  bank,  money  on  hand  and  the 
debts  due  to  him  less  the  amount  that  he  owes;  substan- 
tialh'  upon  everything  except  stocks  on  which  taxes  are 
paid  by  the  corporation,  of  whose  capital  they  are  a  part, 
and  the  amount  invested  in  Government  obligations. 
The  aggregate  amount  of  the  personal  property  subject 
to  taxation  in  that  city,  if  a  fair  return  of  it  were  made, 
would  doubtless  amount  to  nearly  as  much  as  the  ap- 
praised value  of  the  real  estate,  and  yet  the  records  show 
that  its  real  estate  bears  eighty-five  per  cent,  of  the  tax- 
ation. I  have  seen  a  statement — doubtless  a  correct 
one — that  in  one  of  the  wealthy  cities  of  the  State,  con- 
taining between  thirty  and  forty  thousand  people,  sixty- 
seven  persons  only  had  last  year  any  personal  property 
subject  to  taxation.  A  large  proportion  of  personal 
property  is  intangible  and  invisible.  It  escapes  taxation 
because  no  return  of  it  is  made.  Ver}^  few  persons  are 
perfectly  honest  in  the  returns  which  they  make  to  the 
assessors.  There  is  not  a  State  or  county  in  the  Union 
where  such  property  is  taxed  in  which  that  which  is 
intangible  does  not  escape  its  proper  proportion  of  bur- 
den. This  is  true  in  a  much  larger  degree  in  cities  than 
in  rural  districts.  In  the  former  the  tax-payers  have 
facilities  for  concealment  which  are  not  possessed  by  tax- 
payers in  the  latter.  Farmers  are  not  usually  the  hold- 
ers of  any  considerable  amount  of  securities.  Their 
property  is  chiefly  visible,  and  if  any  of  them  do  hold 
taxable  securities  the  fact  is  usually  known  in  the  neigh- 
borhood and  rarely  escapes  the  vigilance  of  assessors. 
Then,  too,  they  are  more  permanent  in  their  residence 
than  people  who  reside  in  cities,  and  they  have  less  in- 
ducement to  conceal  their  means,  inasmuch  as  having 
no  municipal  taxes  to  pay,  the  taxation  to  which  they 
are  subjected,  compared  with  that  in  cities  and  towns,  is 
small. 


B14 


On  the  other  hand,  the  larger  part  of  the  inhabitants 
of  our  great  cities  are  not  the  owners  of  the  buildings 
which  the}'  occup}-;  the}'  frequently  change  their  places 
of  residence;  they  are  not  known  to  their  next  door 
neighbors;  their  means  consist  largely  of  intangible 
property,  the  existence  of  which  is  known  only  to  them- 
selves. The  rate  of  taxation  is  high;  the  inducement  to 
make  dishonest  returns  is  strong,  and  the  public  senti- 
ment against  this  kind  of  dishonesty  is  less  pronounced 
in  cities  than  in  the  countr3^  The  high  taxes  in  cities 
also  driv^e  thousands  of  men  who  do  business  in  them 
into  the  neighboring  towns  where  taxes  are  lower. 
Large  numbers  of  business  men  of  New  York  and  Boston 
have  their  residences  in  suburban  towns.  There  are 
undoubtedly  other  inducements  for  living  where  they  do, 
but  the  avoidance  of  high  taxes  is  with  most  of  them  an 
important  consideration.  They  make  their  money  in  the 
cities,  they  enjoy  all  the  advantages  in  the  transaction  of 
business  which  residents  enjoy,  but  they  contribute  little 
or  nothing  to  the  support  of  the  State  governments  or  to 
the  payment  of  the  interest  on  cit}-  debts.  Hundreds  of 
rich  men  in  Massachusetts  (and  it  is  not  a  pleasant  fact 
to  contemplate)  are  constantl}'  on  the  wing  to  escape 
taxation. 

The  exemption  of  the  obligations  of  the  Government 
from  taxation  is  another  important  fact  to  be  borne  in 
mind  in  considering  the  subject  of  taxes  upon  personal 
property.  There  are  not  less  than  $1,600,000,000  now 
invested  in  the  United  States  in  Government  bonds,  to 
say  nothing  of  Government  notes  and  the  notes  of  the 
national  banks,  from  which  no  revenue  is  derived.  It 
is  true  that  this  exemption  enables  the  Government  to 
reduce  the  rate  of  interest  on  its  bonded  debt,  and  that 
tax-payers  derive  indirect  advantage  from  this  exemp- 
tion. But  the  interest  on  the  public  debt  is  paid  b}^  ex- 
cise and  customs  duties,  which,  although  they  add  to 
the  cost  of  the  articles  which  enter  into  general  con- 
sumption, are  not  cared  for  by  the  masses.  It  is  direct 
taxes — taxes  which  are  levied  for  the  support  of  mu- 
nicipal Government  and  the  payment  of  the  interest  on 
municipal  debt — that  tax-paj-ers  complain  of  and  seek 
to  avoid.     Then,  too,  the  system  of  taxation  differs  in 


31§ 

different  States.  In  some,  for  the  purpose  of  encourag- 
ing home  industries,  all  manufactures  are  exempt  from 
taxes;  in  others  everything  is  taxed:  the  grain  which 
the  farmers  need  for  the  support  of  their  families;  the 
horses  required  for  the  cultivation  of  their  lands;  the 
cows  even,  upon  which  many  families  largely  depend 
for  support;  the  absolute  necessaries  of  life  are  subject 
to  taxation. 

In  many  States  and  cities  the  income  from  Govern- 
ment four  per  cents.,  which  are  exempt  from  taxation,  is 
equal  to  the  income  from  six  per  cents,  wdiich  are  taxa- 
ble, in  some  cities  it  is  larger.  There  is  also,  in  many 
States  and  cities,  what  may  be  called  double  taxation. 
Thus,  mortgages  upon  real  estate  are  taxable,  as  is  also 
the  property  that  secures  them.  Depositors  are  taxed 
for  their  deposits  in  banks,  while  the  banks  are  taxed 
on  the  same  deposits;  and  yet  with  all  the  efforts  that 
are  made  to  reach  it,  probably  three-quarters  of  the 
personal  property  in  the  United  States  subject  to  taxa- 
tion escapes  it. 

Taxation  of  personal  property  in  many  cities  is  so  op- 
pressive to  industry,  so  unequal,  so  demoralising,  that 
many  of  our  most  judicious  economists  have  come  to 
the  conclusion  that  it  would  be  advisable  to  discon- 
tinue it  and  adopt,  substantially,  the  British  system. 

In  Great  Britain  capital,  except  so  far  as  real  estate 
is  capital,  is  not  taxed.  Manufactures,  stocks  in  trade, 
ships,  in  fact  all  industries,  the  prosperity  of  which  is 
national  prosperity,  are  exempt  from  taxation. 

The  question  then  arises  in  view  of  the  objections 
which  lie  against  taxation  upon  personal  property,  would 
it  be  possible,  and  if  possible,  would  it  be  advisable,  to 
relieve  this  class  of  property  altogether,  and  look  to 
other  sources  for  the  necessary  revenues  ?  And  would 
it  be  judicious  to  tax  the  rentals  of  real  estate,  instead 
of  the  real  estate  itself?  Could  a  system,  which  works 
well  in  an  old  country  like  Great  Britain,  where  land  is 
a  luxury  and  held  chiefly  by  the  wealthy,  and  where 
the  income  from  it  is  reliable  and  can  be  estimated  with 
certainty,  be  safely  and  with  justice  introduced  into  a 
new  country  like  the  United  States,  where  so  large  a 
portion   of   the    land  is  uncultivated    and   held  for  the 


816 

prospective  rise  in  value,  and  where  few  wealthy  people 
have  country  estates?  In  Great  Britain  the  income  of 
lands  (although  the  crops  vary  in  amount,  as  every- 
where else,  as  the  seasons  are  favorable  or  unfavorable, 
and  in  value  by  the  ever-controlling  law  of  suppl}^  and 
demand)  can  be  estimated  for  a  series  of  years  with 
nearly  as  much  accuracy  as  the  income  from  consols. 
In  that  country  money  is  rarely  invested  in  unimproved 
lands,  with  a  view  to  an  advance  in  value  by  increasing 
population  and  improvements  around  them.  In  the 
United  States  many  millions  of  acres  are  so  held.  Some 
men  purchase  Western  lands  and  put  them  under  cul- 
tivation; others  purchase  lands  and  permit  them  to  re- 
main uncultivated,  to  be  enhanced  in  value  by  the  labor 
bestowed  upon  those  which  are  improved.  It  would 
certainly  be  unfair  to  tax  the  labor  and  capital  which 
have  made  the  cultivated  lands  productive,  and  relieve 
from  taxes  the  uncultivated  lands  which  have  been  in- 
creased in  value  by  this  very  capital  and  labor. 

It  is  contended,  but  erroneously,  that  land  has  no 
value  in  itself,  that  it  is  made  valuable  only  by  the  labor 
and  capital  bestowed  upon  it.  It  is  not  true  that  agri- 
cultural lands  are  only  valuable  by  the  money  laid  out 
upon  them.  They  are  made  valuable  by  the  growth  of 
the  country  in  which  they  are  located.  It  is  not  true 
in  regard  to  city  property.  One  man  buys  a  lot  in  the 
new^er  portions  of  a  city,  and  does  not  build  upon  it; 
the  adjoining  lots  are  built  upon  and  the  unimproved 
lot  thereby  is  increased  in  value.  Hundreds  of  men 
have  been  made  rich  in  all  our  cities  by  the  expendi- 
tures of  others.  Exemption  of  lands  and  city  lots  from 
taxation,  because  no  income  is  derived  from  them, 
would  be  in  fact  a  contribution  from  those  wdiose  capital 
and  labor  are  building  up  cities  and  bringing  \v\\d  lands 
under  cultivation,  to  the  gains  of  those  who  contribute 
nothing  in  this  direction.  It  w^ould  be  giving  decided 
advantages  to  inactive  over-active  capital.  For  these 
reasons  and  others  which  I  have  not  time  to  enumerate, 
taxation  of  rents  instead  of  land  itself  would  be  quite 
unsuitable  to  the  United  States. 

Would  it,  then,  be  advisable  for  States  and  municipali- 
ties to  exempt  intangible  property  and  to  look  for  their 


317 

necessary  revenues  to  taxes  upon  land,  upon  corpora- 
tions, and  to  personal  property  which  cannot  be  con- 
cealed, taxation  upon  which  would  not  be  a  tax  upon 
honest  and  productive  industry  ?  My  own  opinion  is 
that  it  would. 

Taxation  upon  personal  property  under  prevailing 
systems  is  a  temptation  to  concealment,  to  fraud,  to 
perjury.  It  is  a  check  upon  legitimate  enterprise,  a 
burden  upon  industry.  In  many  States  and  cities  men 
who  make  honest  returns  of  their  property  cannot  afford 
to  be  holders  of  their  vState  and  municipal  securities  in 
wdiich  they  would  prefer  to  invest  their  money,  conse- 
quently such  securities  are  chiefly  held  by  those  who 
do  not  make  honest  returns  or  by  non-residents.  If 
these  securities  were  exempt  from  taxation  there  would 
be  a  home  demand  for  them,  and  a  home  influence  in 
the  support  of  State  and  municipal  credit,  which  does 
not  now  exist.  If  the  State  and  municipal  bonds  were 
held  in  the  States  and  municipalities  that  issued  them, 
we  should  hear  nothing  of  repudiation.  Every  obstacle 
in  the  way  of  their  thus  being  held  should  be  removed. 
Public  debts  are  always  burdensome,  but  the  burdens  are 
greatly  relieved  when  the  tax,  the  imposition  of  which 
is  rendered  necessary  by  their  existence,  is  returned  in 
the  form  of  dividends  or  interest  to  the  same  commun- 
ity by  which  the  tax  is  paid. 

The  taxation  upon  all  taxable  property  in  the  city  of 
New  York  is  $2.55  per  hundred,  consequently  none  of 
its  four  per  cent,  bonds  are  held  by  resident  citizens. 
All  are  held  by  non-residents,  and  the  city  draws  no 
revenue  from  them.  An  honest  citizen  holding  such 
bonds  would  receive  only  ii-'  per  cent.,  while  2^''"  would 
go  into  the  State  or  city  treasuries.  Nothing  can  be 
more  injudicious  than  taxes  by  States  and  cities  upon 
their  own  obligations.  Not  only  is  little  or  no  revenue 
derived  from  them,  but  a  great  deal  of  conservative  in- 
fluence is  lost  by  their  being  held  elsewhere  than  at 
home.  If  the  bonds  of  the  large  cities  of  the  United 
States  were  held  by  their  own  citizens,  and  they  would 
be  vSO  held  if  they  were  exempt  from  taxes,  the  rate  of 
interest  might  be  reduced  and  there  would  be  a  perfect 
assurance  that  they  would  never  be  dishonored. 


318 

Taxation  in  Pennsylvania  is  not  as  judicious  as  it 
might  be,  but  it  is  much  more  equitable  and  judicious 
than  it  is  in  other  States.  I  quote  from  a  letter  latelj^ 
received  from  Mr.  George  W.  Childs,  the  proprietor  of 
the  Philadelphia  Z^^^^'^^;'/")  ^s  follows: 

The  State  [of  Pennsylvania]  does  not  tax  real  estate  at  all 
for  State  purposes,  but  derives  its  revenue  almost  exclusively 
from  taxes  on  corporation  stocks,  loans,  earnings,  gross  re- 
ceipts,  mortgages,  money  at  interest,  lincenses  to  taverns,  re- 
tailers, pedlers,  and  taxes  on  foreign  insurance  companies, 
premiums  on  charters  granted  and  collateral  inheritances,  law- 
deeds  and  writs,  etc. 

The  State  leaves  real  estate  to  the  cities  and  counties  to  be 
taxed  for  local  purposes  and  local  revenue. 

In  Philadelphia  the  only  personal  property  taxed  for  local 
purposes  is  comprised  in  two  classes:  P'irst,  household  furni- 
ture; second,  horses,  carriages,  and  cattle.  The  amount  de- 
rived from  these  is  inconsiderable,  the  aggregate  taxable 
value  of  both  of  them  for  this  year  being  17,932,000,  as  against 
a  real  estate  valuation  for  taxation  purposes  of  1^534,964,864. 

Our  system  is  essentially  different  from  that  of  New  York, 
and  may  be  summed  up  in  these  two  brief  sentences:  The 
State  gets  nearly  the  whole  of  its  tax  revenue  from  taxes  on 
corporations  and  lets  real  estate  alone.  Cities  and  towns 
derive  the  tax  revenue  from  real  estate  and  let  personal  taxes 
alone. 

In  closing  this  branch  of  my  subject,  which  my  limits 
prevent  me  from  discussing  at  length,  I  have  only  to 
say  that  from  the  best  information  I  have  been  able  to 
obtain  there  is  no  State  or  city  in  the  Union  in  which  tax- 
ation is  so  equitable,  so  wisely  distributed,  and  so  cheer- 
fully borne,  as  in  Pennsylvania  and  in  her  great  and 
prosperous  city. 

It  will  be  perceived  that  the  revenues  of  Philadelphia 
are  derived  almost  exclusively  from  taxes  upon  real  es- 
tate, and  that  the  exemption  of  personal  property  alto- 
gether would  not  affect  them  to  any  appreciable  extent. 
The  State  of  Pennsylvania  taxes  some  things  that  ought 
to  be  exempt,  but  her  system  is  so  superior  to  that  of 
other  States,  that  it  might  be  very  advantageously  imi- 
tated. 

I  come  now  to  speak  for  a  rew  moments  upon  a  sub- 
ject in  regard  to  which  great  diversity  of  opinion  has 
prevailed  since  the  formation  of  Government — a  diver- 
sity which  still  e:j;ists,  notwithstanding  it  has  been  n^ore 


319 

fully  and  ably  discussed  than  any  other  subject  pertain- 
ing to  the  public  revenues.  It  has  been  in  times  past, 
in  a  very  large  measure,  a  sectional  question;  it  has 
created  more  alienation  between  Northern  and  Southern 
States  than  any  other  question  except  slavery.  It  gave 
birth  to  nullification,  the  parent  of  secession.  The 
South,  being  an  agricultural  country,  producing  large 
quantities  of  cotton  and  tobacco  for  exportation,  the 
value  of  which  depends  very  much  upon  foreign  mar- 
kets, has  been  in  favor  of  free  trade  or  a  tariff  for  reve- 
nue, while  a  tariff  not  only  for  revenue,  but  for  the  en- 
couragement and  protection  of  home  industry,  has  found 
its  chief  support  in  the  North.  There  has  never  been, 
it  is  true,  a  solid  South  or  a  solid  North  on  this  interest- 
ing question.  There  have  been  statesmen  of  the  South 
who  have  favored  protection,  there  have  been  states- 
men in  the  North  who  have  opposed  it,  but  the  prevail- 
ing sentiment  in  the  South  has  been  opposed  to  all 
duties  not  levied  for  revenue  only.  The  prevailing  sen- 
timent in  the  North  has  been  in  favor  of  protective 
duties  also.  This  sectional  difference  of  opinion  is  dis- 
appearing; the  people  of  the  South  are  no  longer  ex- 
clusively an  agricultural  people;  they  are  becoming  to 
some  extent  manufacturers.  The  Southern  advocates  of 
free  trade  are  less  earnest  than  they  formerly  were, 
while  in  the  Northern  States,  as  their  cotton  manufac- 
tures are  no  longer  in  dread  of  foreign  competition,  the 
sentiment  in  favor  of  protection  is  becoming  day  by  day 
less  strong  and  united.  This  change  of  opinion  in  the 
two  sections  has  not,  however,  lessened  the  importance 
of  the  tariff  question.  There  never  has  been  a  time  when, 
in  view  of  the  action  present  and  prospective  of  foreign 
nations,  and  the  condition  of  our  foreign  trade,  this 
question  was  of  so  much  practical  interest  and  impor- 
tance as  now. 

Before  the  war,  when  the  Government  was  free  from 
debt,  there  were  many  opponents  of  all  restrictions  upon 
foreign  commerce.  To-day,  with  the  necessity  pressing 
upon  the  Government  for  large  revenues,  an  advocate  of 
absolutely  free  trade  it  would  be  difficult  to  find.  It  is 
admitted  on  all  sides,  even  by  those  who  were  formerly 
advocates  of  free  trade,  that  a  large  part  of  the  revenues 


320 


must  come  from  duties  upon  foreign  goods.  The  ques- 
tion, then,  upon  which  opinion  is  now  divided,  is  the 
old  question — no  longer,  as  heretofore,  a  sectional  one — 
Shall  custom  duties  be  levied  for  revenue  only,  or  shall 
they  be  levied  for  revenue  and  also  for  the  protection 
of  the  manufacturers  of  the  United  States  against  the 
manufacturers  of  Europe?  I  am  not  one  of  those  who 
believe  that  the  general  principles  of  political  economy 
are  equally  applicable  to  all  nations  or  to  nations  in  their 
different  stages  of  growth  and  development.  Political 
economy  is  not  one  of  the  exact  sciences.  It  is  the  science 
of  national  wealth.  But  the  wealth  of  each  country  de- 
pends upon  its  own  productions  and  the  use  that  is  made 
of  them.  If  purely  an  agricultural  country,  its  wealth 
would  be  the  result  of  the  proper  cultivation  of  its  lands 
and  the  sale  of  its  products  to  other  nations,  or  the  ex- 
change of  them  for  articles  which  it  needed  and  could 
not  produce;  if  an  exclusively  manufacturing  country, 
its  wealth  would  depend  upon  the  capital  which  it  could 
invest  and  the  skill  it  could  educate  and  employ  in  con- 
verting raw  materials  into  articles  for  use,  and  the  mar- 
kets it  could  command  for  them;  if  it  were  a  maritime 
country  only,  its  wealth  would  depend  upon  the  num- 
ber of  ships  it  could  build  and  the  carrying  business  it 
could  obtain.  There  are,  however,  no  such  countries, 
none  that  are  exclusively  agricultural  or  nmnufacturing 
or  maritime.  All  are,  to  a  greater  or  less  degree,  both 
agricultural  and  manufacturing  countries,  and  there  are 
very  few  which  have  not  both  seaports  and  ships.  None 
become  wealthy  without  diversified  industry.  Nearly 
three-quarters  of  the  people  of  France  are  engaged  in 
agriculture,  but  the  great  accumulations  of  wealth  in ' 
France  have  not  come  from  her  soil,  but  from  the  skill, 
the  taste,  the  industry  and  economy  of  her  people,  for 
which  they  are  so  greatly  distinguished.  On  the  other 
hand,  Great  Britain  is  the  greatest  of  manufacturing  and 
maritime  nations.  Her  gains  as  such  have  been  ex- 
ceedingly large,  but  her  wealth  would  have  been  small, 
in  comparison  with  what  it  now  is,  had  not  her  lands 
been  kept  under  the  highest  cultivation.  The  United 
States  has  a  larger  number  of  fertile  acres  than  any 
other  country  in  the  world.     Her  productions  are  varied 


321 

and  of  indispensable  utility.  She  can  produce  all  articles 
necessary  for  the  support  of  man  cheaper  than  they  can 
be  produced  elsewhere,  and  yet  the  United  vStates  would 
be  to-day  a  dependency  upon  the  older  nations  of  Eu- 
rope  if  her  people  had  been  confined  exclusively  ^  to  ag- 
ricultural pursuits.  No  country  has  such  superior  ad- 
vantages in  agriculture,  in  manufacture  or  shipping  that 
it  can  rely  exclusively  upon  either.  All  are  populous 
enough,  all  have  advantages  enough  for  the  varied  in- 
dustries upon  which  national  prosperity  depends.  Nor, 
as  I  have  said,  are  the  same  rules  equally  applicable  in 
all  stages  of  national  growth  and  development.  This 
fact  is  exhibited  in  the  history  of  our  own  country. 
Fifty  years  ago  the  people  of  the  United  States  found 
almost  exclusive  employment  in  agriculture,  in  the  fish- 
eries, in  ship  building  and  navigation.  Now^  the  United 
States  is  rapidly  coming  to  the  front  as  a  manufacturing 
country.  There  are  few  parts  of  the  world  in  which 
her  manufactures  are  not  known.  Her  manufacturers 
are  not  only  able  to  supply  the  home  demand  for  goods 
of  nearly  all  descriptions,  but  they  are  able  to  compete 
in  the  sale  of  such  goods  with  European  countries.  Not 
only  so,  but  some  of  their  manufactures  are  finding 
their  way  into  these  very  countries.  American  cotton 
goods  find  purchasers  in  Manchester,  American  cutlery 
in  Sheffield,  American  musical  instruments  in  Italy, 
American  watches  in  Switzerland.  The  growth  of  man- 
ufactures in  the  United  States  within  the  last  half  cen- 
tury is  without  precedent  in  the  history  of  nations,  and 
great  and  rapid  as  has  been  this  growth,  agriculture  has 
kept  pace  with  it.  While  the  United  States  has  thus 
been  gaining  as  a  manufacturing  country  many  millions 
of  acres  of  land  have  been  put  under  cultivation.  Ag- 
riculture and  manufacture  have,  in  fact,  advanced  to- 
gether hand  in  hand,  and  now  in  the  hundredth  year  of 
her  national  existence,  the  United  States  is  taking  the 
lead  as  an  agricultural  country,  and  is  second  only  to 
Great  Britain  and  France  in  manufactures.  This  growth 
has  taken  place  while  it  has  been  disregarding  the 
teachings  of  political  economists  that  all  restrictions 
upon  commerce  retard  national  prosperity.  Has  the 
United  States  suffered  thus  far  by  this  violation?  Would 


322 


the  cotton  mills,  which  have  added  so  largely  to  the 
wealth  of  New  England,  have  been  built;  would  the 
iron  mines  of  the  Middle  States  have  been  opened  and 
profitably  worked,  as  they  have  been,  had  there  been 
no  protective  duties?  Would  the  advancement  in  the 
United  States  in  productive  power  and  substantial  pros- 
perity have  been  so  great  as  it  has  been  if  no  restriction, 
no  discriminating  duties,  had  been  placed  upon  the  im- 
portation of  foreign  goods?  In  my  opinion,  these  ques- 
tions must  be  answered  in  the  negative.  Great  Britain, 
with  her  large  capital  and  skilled  and  cheap  labor,  would 
have  had  the  power  to  prevent  the  growth  of  our  most 
important  branches  of  manufactures,  and  she  would  not 
have  failed  to  use  it  to  the  fullest  extent,  if  she  had  been 
permitted  to  do  so.  There  have  been,  undoubtedly, 
very  great  offsets  to  the  advantages  derived  from 
protective  duties,  and  the  United  States  has  been  a 
loser  as  well  as  a  gainer  by  them.  They  have  been 
instrumental  in  producing  investments  in  some  kinds  of 
manufactures  that  can  never  be  made  profitable;  large 
amounts  of  money  have  been  sunk  in  cotton  and  woolen 
mills  and  iron  foundries  unwisely  located,  and  which 
would  not  have  come  into  existence  but  for  the  high 
prices  which  restrictive  duties  in  part  created,  and 
which  no  restrictions  could  now  vitalize.  These 
duties  have  also  tended  to  prevent  that  exercise  of 
economy  which  is  indispensable  to  success  in  all 
branches  of  industry,  and  to  none  more  than  in  manu- 
facturing. Manufacturers  have  looked  too  much  to  the 
support  of  the  Government  against  foreign  competition 
and  have  failed  to  exercise  proper  prudence  in  the  man- 
agement of  their  business.  Then,  too,  our  tariffs  have 
been  so  injudiciously  framed  that  they  have  crushed 
some  branches  of  industry,  which  would  have  been 
profitable  without  them,  and  they  have  largely  dimin- 
ished our  foreign  trade.  Still,  if  the  gains  and  losses 
resulting  from  protective  duties  could  be  fairly  esti- 
mated, we  should,  I  think,  be  forced  to  the  conclusion 
that  the  balance  is  on  the  side  of  protection.  Protective 
duties  did  not  originate  in  the  United  States.  One  needs 
to  go  no  further  back  than  the  commencement  of  the 
present  century  to  find  upon  the  statute  books  of  Great 


323 

Britain  prohibitions  of  trade  between  her  own  coun- 
tries and  the  most  rigid  restrictions  upon  importations 
of  foreign  goods.  What  were  known  as  the  Corn  I,aws 
were  repealed  only  a  quarter  of  a  century  ago,  after  the 
severest  struggle  between  the  Commons  and  the  landed 
interests. 

Fifty  years  ago  there  were  not  only  heavy  duties  in 
Great  Britain  upon  raw  silk,  but  the  sale  of  foreign  silk 
goods  was  absolutely  prohibited.  She  now  imposes  cus- 
toms duties  at  home  for  revenue  purposes  only;  but  she 
has  not  been  quite  able  to  enforce  her  free  trade  policy 
in  her  own  colonies.  Small  restrictive  duties  exist  in 
India  and  Australia.  Canada  has  recently  adopted  ^  a 
protective  tariff  which  is  not  only  retaliatory  and  dis- 
criminating against  the  United  States,  but  which  im- 
poses high  duties  upon  British  fabrics.  Nor  is  it  by  any 
means  certain  that  Great  Britain  will  be  able  to  main- 
tain her  free  trade  policy  even  at  home.  There  are 
very  strong  indications  that  she  cannot  or  will  not  un- 
less there  is  a  modification  of  the  restrictive  policy  of 
other  nations,  and  especially  that  of  the  United  States. 
No  one  can  be  long  in  England  without  perceiving  evi- 
dence of  a  steadily  increasing  sentiment  against  what  is 
called  one-sided  free  trade.  Great  Britain  levies  no 
duties  for  protection,  but  she  derives  very  large  reve- 
nues from  duties  on  importations,  no  considerable  part 
of  which  are  derived  from  tobacco  and  spirits  imported 
from  the  United  States. 

While,  however,  I  think  that  it  must  be  admitted  that 
protective  duties  were  needed  in  the  United  States  for  the 
encouragement  and  support  of  manufacturing  industry 
in  its  growth  and  development,  there  ought  not  to  be 
any  question  that  the  need  of  them  no  longer  exists; 
that  they  are  becoming  serious  impediments  to  national 
prosperity.  The  question  now  to  be  considered  in  not 
whether  protective  duties  have  been  right  or  wrong  in 
the  past,  not  whether  the  United  States  has  been  the 
loser  or  gainer  heretofore  by  the  restrictive  policy. 
On  this  point  opinions  widely  differ,  and  there  are  no 
means  by  which  it  can  be  decided.  One  thing  is  ap- 
parent —  the  manufacturing  interests  of  the  United 
States  have  for  some  years  been  greatly  depressed,  and 


324 


they  are  still  depressed.  The  inquiry,  then,  should  be, 
How  shall  this  depression  be  removed  ?  From  whence  is 
relief  to  come  ?  In  my  opinion,  it  can  only  be  looked  for 
in  an  increase  in  our  foreign  trade,  in  larger  markets 
for  oUc-  manufactures.  We  can  now  manufacture  all 
articles,  in  the  production  of  which  machinery  is  made 
to  do  largely  the  work  of  hands,  cheaper  than  they  can 
be  manufactured  in  Europe,  and  there  is  no  obstacle 
in  the  way  of  a  largely  increased  trade  with  foreign 
nations  but  our  refusal  to  trade  with  them  on  equal 
terms. 

We  have  the  most  friendly  relations  with  the  South 
American  States;  why  is  it  that  our  trade  with  them  is 
so  small?  Is  it  not  because  we  put  such  a  tax  upon 
their  commodities  that  we  cannot  receive  them  in  ex- 
change for  ours  ?  Great  Britain  trades  largely  with 
them;  she  has,  in  fact,  a  monopoly  of  the  South  Ameri- 
can trade,  because  she  admits  to  her  ports,  free  from 
duty,  the  products  which  she  receives  in  exchange  for 
her  manufactures.  We  tax  almost  every  important  ar- 
ticle which  they  produce,  and  we  are,  therefore,  pre- 
cluded from  participating  with  Great  Britain  in  a  trade 
by  which  she  has  been  greatly  enriched.  Trade  being 
essentially  barter,  its  existence  depends  upon  free  ex- 
changes. The  cases  in  which  international  trade  is  car- 
ried on  without  such  exchanges  are  exceptional.  We 
tax  almost  everything  that  comes  to  us  from  Europe, 
and  yet  Europe  buys  largely  of  us  cotton,  petroleum, 
breadstuffs  and  provisions;  but  this  happens  because 
the  existing  demand  for  them  cannot  be  elsewhere  sup- 
plied. And  here  let  me  say  that  we  are  counting  too 
much  upon  the  European  demand  for  our  agricultural  pro- 
ducts. Our  exports  of  grain  and  provisions  for  the  last 
three  years  have  been  enormous,  but  such  exports  can- 
not be  depended  upon  Our  harvests  have  been  abund- 
ant, so  abundant  that  had  there  not  been  a  large  foreign 
demand  for  our  agricultural  products.  Western  farmers 
would  have  been  in  desj^air.  In  this  respect  Europe 
has  been  far  less  favored,  and  consequently  there  has 
been  an  unusual  demand  for  what  we  had  to  spare.  A 
full  crop  in  Europe  and  a  short  one  in  the  United  States 
would  be  likely  to  turn  the  tables  against  us  and  put  an 


825 

end  to  gold  redemptions  by  the  Government  and  the 
banks.  We  nuist  bear  in  mind  that  the  European  na- 
tions that  maintain  a  convertible  paper  currency  have 
three  times  as  much  coin  as  circulating  notes.  We  have 
three  times  as  much  paper  money  as  coin.  Our  condition 
would  be  critical  if  the  current  of  exchange  should  be 
unfavorable. 

The  United  States  would  also  buy  coffee  of  Brazil  and 
tea  of  China  and  Japan  and  pay  for  them  in  money  if 
there  were  high  duties  upon  them,  because  they  have 
become,  by  general  use,  articles  of  necessity.  These, 
however,  as  I  have  stated,  are  exceptional  cases;  they 
do  not  invalidate  the  general  rule  that  trade  is  barter 
and  may  be  destroyed  by  restrictions  upon  it. 

Let  us  go  back  to  South  America.  Our  trade  with 
Brazil  is  increasing,  but  the  balance  against  the  United 
States  in  our  trade  with  this  great  empire  is  some  thirty 
millions  of  dollars  annually;  last  year  it  was  upwards  of 
thirty-four  millions.  We  tax  all  her  most  important 
productions,  except  coffee.  Great  Britain  does  not,  and 
consequently  she  controls,  to  a  very  large  extent,  the 
Brazilian  trade.  And  how  is  it  with  the  South  American 
republics?  Their  institutions  were  modeled  upon  ours; 
they  desire  not  only  that  there  should  be  good  political 
relations  between  them  and  the  United  States,  but  com- 
mercial relations  also.  Some  of  them  are  very  import- 
ant States;  they  buy  and  sell  a  good  deal,  but  their 
dealings  with  the  United  States,  when  compared  with 
their  dealings  with  Great  Britain,  are  insignificant.  We 
know  very  little  about  the  South  American  republics; 
we  do  not  regard  them  as  worthy  of  attention ;  we  speak 
of  them  as  being  in  a  chronic  state  of  revolution,  quite 
unworthy  of  our  regard.  In  this  respect  we  do  them 
great  injustice.  W^e  do  not  properly  estimate  the  disad- 
vantages under  which  they  have  labored.  They  were 
mostly  colonized  by  Spain,  and  Spanish  domination  was 
not  calculated  to  improve  their  condition.  The  original 
inhabitants,  although  vastly  superior  in  everything  but 
valor  to  the  North  American  Indians,  were  quite  unfit 
to  be  citizens  under  republican  governments.  The  An- 
glo-Saxons exterminated  the  aborigines,  the  Spaniards 
intermingled  with  them,  and  yet,  unfavorable  as  were  the 


326 

dircumstances  in  which  they  have  been  placed,  these  re- 
publics have  made  progress;  their  Governments  are  be- 
coming stable;  their  industry  is  increasing;  we  have 
friendly  political  relations  with  them,  but  very  little 
trade.  Their  chief  trade  is  with  Great  Britain,  and 
they  are  very  large  consumers  of  British  goods.  Look 
at  Peru;  why  has  the  United  States  no  trade  with  this 
important  State?  Mr.  Christiancy,  our  recently-ap- 
pointed minister  to  Peru,  answered  the  question  in  a 
few  brief  and  telling  words.  To  a  correspondent  of  the 
New  York  Tribune^,  who  asked  him  if  he  carried  to  Peru 
special  instructions,  he  replied: 

No;  my  instructions  so  far  are  general.  I  shall  do  what  I 
can  to  build  up  our  trade  with  that  country,  but  little  can  be 
done  without  a  change  in  our  tariff  laws.  Peru  annually  ex- 
ports now  about  |i  2,000,000  worth  of  guano,  |8, 000,000  of  sugar, 
|6,ooo,ooo  of  nitrate  of  soda,  1:3,500,000  of  wool,  fc, 500,000  of 
silver,  and  other  articles,  making  in  all  about  1:40,000,000  in  ex- 
ports. Of  this  amount  the  United  States  receives  very  little 
and  sends  little  in  return.  Our  tariff  laws  shut  out  the  light 
grades  of  sugar  made  in  Peru,  and  also  the  fine  grades  of  al- 
paca wool  which  she  produces.  A  small  part  of  the  guano  trade 
comes  here,  but  as  trade  has  to  be  reciprocal,  we  cannot  expect 
much  of  an  increase  in  our  commerce  with  Peru  until  a  change 
is  made  in  our  tariff  laws.  English  vessels  do  most  of  the 
carrying  trade  of  that  country,  and,  of  course,  divert  it  to 
England. 

And  how  is  it  with  Chili,  the  most  prosperous  of  the 
South  American  States?  Chili  has  no  manufactures; 
her  chief  productions  are  copper  and  wool,  and  she  re- 
ceives in  exchange  for  them  very  large  amounts  of 
goods  of  the  ver}^  kind  which  the  United  States  can 
produce  cheaper  than  the}-  can  be  produced  in  En- 
gland— such  as  cottons,  hardware,  boots  and  shoes,  and 
agricultural  implements.  Her  trade  might  be  very  prof- 
itable to  us,  but  we  do  not,  to  any  considerable  extent, 
participate  in  it.  Great  Britain  sells  annually  to  Chili 
upwards  of  50,000,000  pounds  of  cotton  goods;  the 
United  States  sells  to  her  less  than  5,000,000  pounds, 
and  yet  vSome  of  our  cotton  mills,  until  recently,  have 
been  idle,  or  partially  so,  for  the  want  of  markets.  We 
have  put  a  prohibitory  duty  upon  the  chief  products  of 
Chili,  and  we  cannot,  therefore,  trade  with  her. 

So  it  is  with  the  Argentine  Republic.     According  to  a 


827 

statement  of  Mr.  David  A.  Wells— who  has  rendered  in- 
valuable services  to  the  countr}-  by  his  exposition  of  the 
condition  of  our  foreign  trade— the  importations  of  this 
republic  in  1874  were  as  follows: 

From  Kiiglaiid,  121,465,000;  from  France,  $19,836,000;  from 
Belgium,  116,777,00(3,  and  from  the  United  vStates,  13,945,000.  In 
that  year  she  bought  of  Great  Britain  more  than  40,000,000 
pounds  of  cotton  goods;  of  the  United  States,  155.000  pounds. 
Great  Britain  found  a  market  there  for  |i, 000,000  worth  of 
boots  and  shoes,  against  |;io,ooo  worth  from  this  country. 

The  reason  for  this  enormous  difference  has  been 
also  the  fact  that  the  chief  products  of  this  republic  are 
prevented  from  coming  to  the  United  States  by  our 
tariff.  The  policy  of  Great  Britain  in  regard  to  foreign 
trade  is  the  reverse  of  ours.  She  loads  her  ships  with 
her  manufactures,  and  exchanges  them  for  the  guano, 
the  sugar,  the  nitrate  of  soda  of  Peru,  the  copper  and 
other  articles  of  Chili,  the  wool  of  the  Argentine  Re- 
public, the  varied  products  of  Brazil;  thus  securing  not 
only  a  valuable  trade,  but  freights  for  her  ships.  _  It  is 
by  her  foreign  trade,  by  taking  the  raw  material  in  ex- 
change for  her  manufactures  and  putting  upon  it  her 
skilled  labor,  and  sending  the  finished  fabric  wherever 
a  market  can  be  found  for  them,  that  she  maintains  her 
manufacturing  and  maritime  ascendency. 

Now  let  us  look  very  briefly  at  our  existing  tariff.  It 
was  a  war  measure.  In  i860  the  average  duty  on  duti- 
able goods  was  nineteen  per  cent.  It  is  now  forty-nine 
and  seventy-five  hundredths.  By  those  who  framed  the 
present  tariff,  largely  increased  revenue  was  regarded 
as  being  absolutely  necessary  for  the  support  of  the 
Government  and  protective  duties  were  considered  nec- 
essary to  render  the  United  States  independent  of  foreign 
nations.  Both  have  been  accomplished,  but  at  no  small 
cost.  The  tariff  has  protected  large  interests,  but  at  the 
expense  of  large  interests.  It  has  produced  large  reve- 
nues, but  the  revenues  would  have  been  much  larger 
had  it  not  been  prohibitory  as  well  as  protective.  It  is 
only  necessary  to  glance  at  the  duties  on  a  few  articles 
to  perceive  that  the  leading  features  are  protective  even 
to  the  extent  of  exclusion.  The  Secretary  is  troubled 
by  the  liberal  appropriations  of  Congress;  he  sees  not 


328 


only  deficiencies,  but  an  increase  of  the  public  debt  in 
prospect;  he  needs  more  revenue,  but  3^et  fails  to  rec- 
ommend a  modification  of  the  tarifi"  which  would  pro- 
duce it.  I  have  no  time  and  this  is  not  the  place  to  go 
into  minute  details,  but  I  cannot  avoid  naming  a  few 
articles  the  duty  on  which  prevents  revenue  and  sus- 
tains monopoly. 

Salt  is  used  by  every  family  in  the  United  States; 
enormous  amounts  are  used  in  curing  meats  and  fish; 
it  is  produced  largely  in  the  United  States,  and  the  pro- 
duction could  be  increased  almost  without  limit.  The 
duty  is  39^  per  cent,  when  imported  in  bags  and  69  per 
cent,  in  bulk.  Although  the  people  of  the  United 
States  are  subject  to  a  heavy  tax  upon  the  salt  which 
they  use,  the  Government  derives  very  little  revenue 
from  it. 

Quinine  is  an  article  of  indispensable  utility  in  a  large 
part  of  the  United  States.  It  is  one  of  the  very  few 
specifics  known  to  the  medical  profession.  It  is  exten- 
sively used  in  the  army  and  in  the  hospitals;  a  large 
part  of  the  Mississippi  Valley  would  be  uninhabitable 
without  it.  Quinine  is  subject  to  a  duty  of  twenty  per 
cent.,  by  which  duty  hundreds  of  thousands  of  families 
are  compelled  to  contribute  not  to  the  revenues,  but  to 
the  gains  of  the  manufacturers.  It  is  estimated  that 
1,200,000  ounces  of  this  invaluable  article  are  annually 
consumed  in  the  United  vStates,  the  profits  on  which  are 
not  less  than  fifty  cents  an  ounce  in  addition  to  what 
would  be  a  fair  manufacturers'  profit.  A  few  ounces, 
w'hen  prices  are  excessive,  do  come  to  the  United  States, 
but  the  duty  upon  it  is  substantially  prohibitory.  In 
1878  the  Government  received  in  duties  on  imported 
quinine  $10,171.60.  The  manufacturers  realized  a  profit 
of  not  less,  probably,  than  $600,000.  Two  powerful 
firms  have  control  of  the  manufacture,  and  are  made 
immenseh'  rich  at  the  expense  of  the  revenue  and  con- 
sumers. It  can  be  made  b}^  all  chemists,  but  there  is 
no  competition  in  its  manufacture;  foreigners  are  pre- 
vented from  competing  by  the  tariff;  home  competition 
is  prevented  by  the  monopolists,  who  have  the  power 
and  do  not  hesitate  to  use  it  to  crush  any  who  dare  to 
interfere  with  the  trade. 


829 

Blankets  are  subject  to  specific  and  ad  valorem  duties. 
Those  that  are  valued  at  over  forty  cents  a  pound  are 
subject  to  a  specific  duty  of  twenty  cents  a  pound  and 
thirty-five  per  cent,  ad  valorem;  those  valued  at  over 
eighty  cents  a  pound  are  subject  to  forty  cents  specific 
duty  and  thirty-five  per  cent,  ad  valorem.  Such  blankets 
as  are  used  by  millions  of  laboring  people  in  the  United 
States  cost  in  England  about  ^1.75  cents  a  pair;  the 
duty  on  a  pair  of  such  blankets  is  ^1.595.  Very  few 
blankets  are  imported;  the  revenue  from  these  the  last 
year  was  $2,884,  and  yet  it  is  estimated  that  20,000,000 
pounds  of  blankets  were  sold  and  used  last  year  in 
the  United  States,  the  profit  of  which  to  the  manu- 
facturers, as  the  effect  of  tariff,  was  not  less  than  ^5,000,- 
000. 

There  is  a  large  demand  for  steel  rails,  a  demand 
which  is  steadily  increavsing,  as,  taking  into  considera- 
tion the  time  they  will  last  on  railroads  whose  traffic  is 
heavy,  they  are  cheaper  than  iron.  The  price  of  steel 
rails  m  the  United  States  is  now  about  $44  per  ton;  it 
has  been  lower,  but  it  is  advancing  with  the  increasing 
demand.  They  can  be  made  in  England  and  delivered 
in  New  York  at  $32  per  ton;  the  duty  on  them  is  $25 
per  ton,  and  consequently  none  are  imported.  Steel  rails 
can  be  made  as  cheaply  in  the  United  States  as  in  En- 
gland, and  the  home  manufacturers  have  the  advantage 
over  the  foreign  maker  in  the  cost  of  freight,  and  yet 
railroad  companies  pay  $12  a  ton  more  for  steel  rails 
than  they  would  pay  if  there  were  no  tariff.  Forty-four 
dollars  a  ton  seems  like  a  very  l-ow  j^ice  for  steel  rails, 
but  under  the  improved  processes  they  are  made  more 
cheaply  than  iron  rails  were  made  before  the  war.  The 
manufacture  of  steel  rails  is  a  very  important  business 
in  the  United  States,  and  should  receive  the  support 
which  a  tariff  for  revenue  would  give  it,  and  this  could 
not  fail  to  be  largely  protective.  The  tariff  says  that 
not  a  ton  of  steel  rails  shall  be  imported  into  the  United 
States;  that  the  home  manufacturers  shall  have  the  field 
free  from  competition;  that  not  a  dollar  revenue  shall  be 
derived  from  a  very  extensive  and  profitable  branch  of 
manufacture.  What  do  the  managers  of  railroads  say 
to  this  ?     We  ought  to  hear  from   them  upon   the  sub- 


330 

ject.    We  do  not.    Why?     The  answer  should  come  from 
them. 

Copper;  the  duty  on  copper  is  five  cents  a  pound. 
The  price  in  England  is  about  fourteen  cents.  The  duty 
is  prohibitory;  none  is  imported.  It  is  to  some  extent 
exported.  Last  year  11,299,876  pounds  went  from  the 
United  States  to  Germany  and  France.  In  1876  the  rev- 
enue collected  on  imported  copper  was  $264.05;  in  1877 
it  was  $11.50;  in  1878  it  was  five  cents.  And  yet  the 
duty  of  five  cents  a  pound  still  remains.  The  produc- 
tion of  copper  in  the  United  States  is  about  50,000,000 
pounds  annually,  four-fifths  of  which  are  consumed  in 
the  United  States  and  one-fifth  exported.  The  tariff 
compels  the  United  States  purchasers  to  pay  three  or 
four  cents  a  pound  for  copper  more  than  they  would  if 
it  were  duty  free.  A  score  or  two  of  rich  men  have  the 
control  of  the  market  and  keep  prices  to  just  the  point 
which  will  prevent  importations.  Why  should  they  have 
it?  Why  should  there  be  a  prohibitory  duty  upon  cop- 
per? The  consumers  are  injured  by  it  and  the  Govern- 
ment is  defrauded  by  it.  The  gainers  are  the  proprietors 
of  a  couple  of  mines  on  Lake  Superior,  who  pocket 
their  gains,  keep  the  knowledge  of  the  amount  to  them- 
selves, and  are  quite  content  with  the  situation.  And 
well  they  may  be,  for  their  profits  are  a  million  of  dol- 
lars larger  than  they  would  be  if  copper  were  duty  free, 
and  half  a  million  larger  than  they  would  be  if  the  duty 
were  imposed  for  revenue  only. 

I  mention  these  articles — salt,  quinine,  blankets,  steel 
rails,  and  copper-*-not  because  they  are  exceptional 
cases  in  which  monopolists  are  enriched  at  the  expense 
of  consumers  and  the  Government,  but  because  I  lack 
time  to  enumerate  others,  and  because-  they  are  suffi- 
cient to  illustrate  the  character  of  the  tariff.  An  exami- 
nation of  it  would  satisfy  any  unprejudiced  man  that 
it  is  not  in  the  interest  of  public  revenue  or  of  for- 
eign trade;  it  is  unquestionably  prejudicial  to  both.  It 
is  maintained  in  the  interests  of  capitalists.  If  it  could 
be  taken  up  by  Congress  and  the  duties  on  each  article 
could  be  independently  considered,  it  would  be  made,  as 
it  ought  to  be,  simply  a  revenue  tariff.  It  has  not 
been  so  considered.     The  protective  interests  stand  by 


831 

each  other,  the  support  of  one  being  necessary  for  the 
support   of   another;  their   strength   is   in   their    unity. 
There   is,   in   fact,   a  chain  of  interests,  every  link   of 
which  is  important  to  the  maintenance  of  the  protective 
and  prohibitory  systems.     Members    of   Congress  who 
represent  men  engaged  in  the  manufacture  of  blankets 
think,  I  have   no   doubt,  that  it  is  a  shame   that  there 
should  be  a  prohibitory  duty  on  salt  or  quinine,  but  they 
sustain  the  duties  on  them  nevertheless.     The  represen- 
tatives of  other  protected  interests  may  be  of  the  opin- 
ion that  the  prohibition  of  the  importation  of  copper  is 
a  very  large  contribution  to  the  wealth  of  a  few  persons 
at  the  expense  of  the  revenue  and  of  the  users,  and  to 
the  prejudice  of  foreign  trade;  but  the  duty  on  copper 
is  a  link  in  the  chain  that  binds  great  interests  together, 
and  it    therefore    cannot  be    discontinued;    and    so  the 
tariff  remains  as  it  is,  depriving  the  Government  of  needed 
revenues  and  building  up  monopolies   at  the  expense  of 
consumers,  in  violation  of  the  spirit  of  our  institutions. 
Political  questions  have  of  late  been  the  engrossing 
questions;  not  a  single  member  of  the  present  Congress 
was  elected  with  special  reference  to  his  views  upon  Fed- 
eral taxation.     There  are  but  few  journals  in  the  country 
in  which  the  subject  is  discussed.    It  is  not  now  a  question 
upon  which  parties  divide.     Party  leaders  on  both  sides 
ignore  it,  because  they  are  uncertain  whether  they  would 
be  the  gainers  or  losers  by  taking  a  decided   stand   in 
regard  to  it.     It  cannot,  however,  be  kept  long  in  the 
background,  it  must  come  to  the  front.     As  long  as  high 
prices  were  maintained,  as  long  as  the  people  were  ex- 
ulting in  apparent   prosperity,   as    long    as    credit  was 
cheap  and  borrowing  was  easy,  taxation,  direct  as  well 
as  indirect,    was  not  felt  to    be   burdensome.     A  great 
change  has  taken  place  within  the  last  five  years;  prices 
have  greatly  declined;  with  the  exception  of  our  man- 
ufactures of   cotton  goods,  our  manufacturing  industry 
is  in  a  depressed  condition.     Farmers  are  also  complain- 
ing as  well  as  manufacturers,  notwithstanding  the  large 
demand  for  our  agricultural  products,  which  has  turned 
the  exchanges  in  our  favor.     Nearly  all  of  our  agricul- 
tural products   are    lower   than    they   were   before  the 
war,    when    we   had  no  national    debt   and    municipal 


382 

debts  were  not  burdensome.  The  tax-paj-ers  feel  espe- 
cially the  burden  of  direct  taxation,  and  in  devising 
means  to  reduce  it  their  attention  cannot  long  fail 
to  be  directed  to  the  burdens  to  which  they  are  sub- 
jected by  the  tariff,  and  when  it  is  so  directed  the  pop- 
ular demand  for  tariff  reform  will  be  irresistible. 

If  those  who  are  being  enriched  by  protective  duties 
are  wise,  they  will  take  the  lead  in  bringing  about  this 
much-needed  reform.  If  they  do  not,  they  may,  at  no 
distant  day,  be  deprived  of  the  advantages  which  a  tariff 
for  revenue  would  give  them.  The  people  are  apt  to  go 
from  one  extreme  to  another,  and  the  danger  to  be 
avoided  is  such  an  uprooting  as  will,  in  sweeping  away 
every  vestige  of  protection,  deprive  the  Government 
of  the  income  it  needs  from  revenue  duties  upon  foreign 
goods. 


Seventh  Lecture. 

capital  and  eabor. 

One  of  the  mo.st  troublesome  questions  which  demand 
the  attention  of  statesmen  and  political  economists  is 
the  question  of  the  proper  relations  between  capital  and 
lal)or,  employers  and  employees;  a  question  which  has 
always  been  troublesome,  notwithstanding  the  fact  that 
these  relations  are  close  and  inseparable.  The  rewards 
of  labor  are  dependent  on  capital;  capital  would  be  un- 
productive without  labor.  If  it  is  said  that  labor  builds 
cities,  and  factories,  and  ships,  constructs  railroads,  de- 
velops mines,  cultivates  lands,  it  may  be  said  with 
equal  truth  that  the  labor  thus  employed  is  supported 
by  capital,  that  without  capital  there  would  have  been 
neither  cities  nor  factories,  nor  ships,  nor  railroads,  that 
mines  would  have  been  but  superficially  worked,  lands 
would  have  been  but  imperfectly  cultivated.  While 
labor  is  the  source  of  national  wealth,  it  is  capital  which 
gives  it  direction  and  employment.  Labor  creates  capital , 
capital  supports  labor.  Laborers  are  very  frequently 
becoming  capitalists.  Thus  it  has  always  been  and  al- 
ways will  be.     But  while  capital  and  labor,  the  employer 


333 


and  the  employee,  are  thus  dependent  upon  each  other, 
while  they  are  so  inseparably  connected,  while  they  are 
necessarily  co-workers,  they  very  rarely  work  together 
harmoniously.  There  seems  to  be  a  deep  rooted,  an 
abiding  hostility  of  labor  against  capital.  Christianity 
has  not  softened  it,  the  general  spread  of  intelligence 
has  stimulated  instead  of  lessening  it.  The  severest 
struggles  between  labor  and  capital  are  in  Christian 
lands  and  where  civilization  has  made  the  greatest  ad- 
vances. Christianity  in  its  principles,  whatever  hier- 
archies have  made  it,  is  essentially  democratic,  and  so 
is  education.  It  is  not  surprising,  therefore,  that  where 
these  influences  prevail  the  more  earnest  will  labor  be 
in  the  assertion  of  what  it  conceives  to  be  its  rights. 
The  dissatisfaction  of  laborers  with  their  condition,  the 
restlessness  which  is  so  manifest  among  them  in  the 
most  enlightened  countries  of  Europe,  as  well  as  in  the 
United  States,  is  an  indication  of  the  spread  of  intelli- 
gence. I  do  not,  therefore,  consider  the  fact  that  the 
contest  is  the  sharpest  in  countries  most  advanced  in 
Christian  civilization  and  in  education  at  all  discourag- 
ing; on  the  contrary,  I  regard  it  as  a  hopeful  and 
healthy  indication.  I  do  not  think  that  perfectly  just 
relations  can  ever  be  established  between  capital  and 
labor,  that  there  can  ever  be  a  fair  division  of  profits 
between  them,  but  I  do  think  that  the  dissatisfaction  of 
laborers  and  the  serious  consequences  of  labor  strikes 
must  lead  to  a  more  thorough  examination  of  the  labor 
question,  and  bring  about  a  better  understanding  be- 
tween employers  and  employees  than  has  hitherto  ex- 
isted. Not  only  so,  but  I  believe  this  examination  will 
show  that  many  of  the  obstacles  in  the  way  of  better 
relations  between  them  and  of  advancement  of  their 
common  interests  are  artificial,  and  that  they  do  and 
must  prosper  and  suffer  together.  The  present  depres- 
sion in  Great  Britain  does  not  affect  the  laborers  alone. 
They  are  undoubtedly  the  greatest  sufferers,  because 
ver}'  few  of  them  have  accumulated  anything  in  more 
prosperous  times,  and  when  thrown  out  of  employ- 
ment they  have  no  means  of  support;  but  the  cap- 
italists also  suffer.  While  the  laborers  are  complaining 
of  a  reduction  of  wages,  many  capitalists  are  consider- 


334 


ing  whether  even  with  such   reduction   it  would  not  be 
better  to  close  their  works  than  go  on. 

That  there  has  been  for  some  years  and  still  is  v^ery 
great  business  depression  among  all  the  leading  nations, 
a  depression  which  bears  heavily  upon  capitalists  and 
laborers,  is  well  known.  A  revival  is  taking  place  in 
the  United  States,  but  it  has  not  become  decided  or 
general.  Six  years  ago  all  the  nations  were  appar- 
ently in  a  prosperous  condition.  Trade  was  active, 
wages  were  high,  ships  were  well  freighted,  and  there 
were  good  markets  for  the  abounding  productions  of  the 
world.  What  has  produced  the  change?  Why  has  so 
great  depression  followed  a  period  of  unusual  activity 
and  material  progress?  The  causes  of  this  depression 
must  lie  back  of  it.  They  must  have  been  at  work 
silently  before  there  was  any  manifestation  of  their  ex- 
istence. Some  of  them  are  very  readily  discovered. 
UnreasonaVjle  as  it  may  seem,  steam  and  electricity,  the 
invention  of  labor-saving  machinery,  the  very  instru- 
mentalities of  material  progress,  are  among  the  causes 
of  the  existing  depression.  They  have  created  a  revo- 
lution in  trade,  in  commercial  intercourse,  in  business  of 
all  descriptions;  a  revolution  which,  whatever  ma}'  be 
its  ultimate  result,  could  not  fail  to  be  temporarily 
prejudicial  to  many  important  interests  and  to  diminish 
the  demand  for  labor  and  the  wages  of  the  laborer. 
Political  revolutions,  no  matter  how  necessary  they  may 
be,  no  matter  how  beneficial  they  may  ultimately  prove 
to  be,  are  a  great  disturbance  while  in  progress.  The 
same  is  true  in  regard  to  revolutions  in  trade.  That 
the  world  is  to  be  benefited  by  labor-saving  machinery, 
by  reduced  cost  of  production,  by  freer  and  speedier  con- 
nection between  buyers  and  sellers,  between  producers 
and  consumers,  cannot  be  doubted;  and  yet  it  is  obvious 
that  while  such  really  beneficial  processes  are  at  work, 
and  before  the  power  of  adaptation  comes  into  full  exer- 
cise, there  must  be  derangement  of  business  and  dim- 
inution of  employment,  producing  inevitably  suffering 
among  laborers,  disappointment  and  misfortune  among 
business  men.  The  forces  which  have  disturbed  the 
old  order  of  things  have  been  at  work  for  some  years. 
The  effect  is  no\y  seen  in  a  decline  of  prices,  in  lower 


33ij 


wages,  reduced  demand  for  labor;  all  of  which  are  in- 
dicative of  overproduction.  It  is  contended,  I  know, 
that  there  can  be  no  sugli  thing  as  overproduction;  that 
nothing  will  be  produced  to  be  wasted,  and  that  con- 
sumption and  production  must  go  hand  in  hand.  This 
is  undoubtedly  true  in  theory,  and  in  course  of  time  it 
will  become  true  in  fact.  Continuous  overproduction  is 
impossible;  temporary  overproduction  is  not  only  pos- 
sible, but  there  are  good  evidences  of  its  existence  not 
only  in  other  countries,  but  in  the  United  States.  If 
there  had  not  been,  the  great  decline  in  prices  which 
has  been  ruinous  to  so  mau}^  would  not  have  occurred. 
Not  only  has  there  been  overproduction,  but  the  ca- 
pacity to  produce  is  now  greatly  in  advance  of  the  pres- 
ent and  of  any  early  prospective  demand.  The  cotton 
and  iron  and  woolen  mills  of  European  nations  and  of 
the  United  States,  if  operated  to  their  full  capacity  for 
six  months,  would  supply  the  demand  for  their  produc- 
tions for  a  year.  Many  mills  are  idle,  more  are  only 
partially  employed,  not  because  prices  are  low,  but  be- 
cause the  demand  is  insufficient.  Production  has  taken 
the  lead  of  consumption.  Hence  the  depreciation  in 
many  branches  of  industry  and  the  inability  of  willing 
hands  to  find  employment.  This  depression  is  aggra- 
vated by  local  causes,  but  it  is  felt  everywhere.  I  do 
not  know  where  to  look  for  a  country  in  which  it  does 
not  exist.  All  are  affected  to  a  greater  or  less  extent 
by  the  same  influences.  Nowhere  is  capital  receiving 
remunerative  returns;  nowhere  is  labor  receiving  proper 
compensation.  I  do  not  mean,  of  course,  when  I  say 
this,  that  there  are  no  branches  of  industry  which  are 
not  profitable,  no  cases  of  individual  prosperit3^  no  lo- 
cations in  which  labor  is  not  in  demand  and  wages  are 
high.  What  I  mean  is  that  there  is  no  country  whose 
general  trade  and  industries  are  in  a  vigorous  and  healthy 
state  and  where  laborers  find  full  and  fairly  remunerative 
employment.  The  revolution  to  which  I  have  referred 
is  still  going  on;  the  process  is  painful,  but  the  results 
will  be  healthful.  Let  us  note  some  instances  of  this 
revolution  and  the  immediate  effects  thereof: 

Whatever  diminishes  distances  between  nations,  what- 
ever helps  to  bring  them   into   closer  communication, 


336 

must  be  eventually  beneficial  to  their  people;  and  yet, 
for  a  time,  many  important  interests  may  be  injuriously 
affected  by  it.  The  Suc/C  CanaJ,  which  brings  Western 
Europe  some  five  thousand  miles  nearer  to  the  Orient 
than  it  was  before  this  great  work  was  completed,  must 
be  of  great  advantage  to  both  the  Eastern  and  Western 
nations,  and  3^et  the  reduction  in  the  number  of  ships  re- 
quired in  the  traffic  between  them,  caused  by  this  great 
diminution  of  distance,  has  been  a  severe  blow  to  ship- 
owners and  to  ship-builders,  and  especially  to  working 
men  in  ship-building  districts. 

The  electric  telegraph  is  one  of  the  time-saving  and 
interest-saving  instruments  of  the  day,  and  yet  a  great 
many  people  have  been  injured,  and  a  few  ruined,  by 
it.  It  has  introduced  radical  changes  in  many  branches 
of  trade;  it  has  rendered  unnecessary  the  service  of 
thousands  of  middle  men. 

Machinery,  which  has  so  largely  taken  the  place  of 
hands,  must,  by  lessening  prices,  be  of  incalculable 
benefit  to  mankind,  but  there  can  be  no  question  that 
the  effect  upon  the  laboring  classes  has  been  exceed- 
ingly disheartening  and  injurious.  Laboring  men  look 
upon  labor-saving  machines  as  their  enemy,  and,  for 
the  present,  rightfully. 

Iron  steamships  are,  in  these  hurrying  days,  greatly 
superior  to  wooden  sailing  vessels.  The  commerce  of 
the  world  is  quickened  and  increased  by  the  change 
which  steam  and  iron  have  made  in  ships,  and  yet  the 
substitution  of  iron  for  wood  in  ship-building  and  of 
steam  for  sails,  as  propelling  power,  has  deprived  thou- 
sands of  mechanics  and  sea-faring  men  of  needed  em- 
ployment, made  solitudes  of  ship  yards,  and  done  much 
to  deprive  the  United  States  of  the  rank  which  she  held 
thirty  years  ago  as  a  maritime  nation. 

The  business  of  the  world  is  being  revolutionised  by 
such  agents  as  I  have  named,  and  while  these  revolu- 
tions are  going  on  capital  and  labor  both  suffer,  but  labor 
to  the  greatest  extent.  Capital  is  easily  transferred  from 
one  branch  of  lousiness  to  another,  and  it  can  afford  for 
a  time  to  be  idle.  I^abor,  on  the  other  hand,  cannot  be 
readily  diversified,  and  stands  in  absolute  need  of  con- 
stant employment.     We  must,  I  think,  admit  that  the 


337 

condition  oi'  laborers  has  not  been  improved  by  the  ma- 
terial progress  of  the  nations  which  is  so  marked  a 
characteristic  of  the  present  age.  This  progress  has 
been  chiefly  the  result  of  machinery,  and  it  will  be 
noticed  that  the  discontent  and  suffering  of  the  laboring 
classes  are  most  manifest  in  those  countries  in  which 
machinery  has  become  to  the  greatest  extent  a  sub- 
stitute for  hands. 

The  general  disturbance  produced  by  the  revolu- 
tionary forces  at  work  is  aggravated  in  some  countries 
and  lessened  in  others  by  local  causes.  It  is  aggravated 
in  Great  Britain  by  the  disproportionate  number  of  men 
who  are  dependent  on  mechanical  employment  and  by 
her  system  of  land  tenure.  In  previous  lectures  I  have 
spoken  of  her  manufacturing  industries  and  the  causes 
of  their  decline.  The  great  body  of  the  real  estate  of 
Great  Britain  is  held  by  a  few  thousand  people.  A 
score  or  two  own  the  larger  part  of  the  acreage  of  Scot- 
land; a  few  hundred  the  larger  part  of  England.  The 
masses  have  no  interest  in  the  soil,  not  even  as  tenants. 
The  lands  are  generally  entailed,  the  large  estates  are 
being  increased,  and  the  old  systems  of  tenantry,  hav- 
ing become  unprofitable  to  the  proprietors,  has  been 
discontinued.  Lands  in  Great  Britain  are  now  being 
chiefly  cultivated  by  a  class  of  men  called  farmers,  who 
were  quite  unknown  half  a  century  ago,  and  who,  hav- 
ing the  skill  and  capital  necessary  to  make  the  business 
profitable,  become  the  lesees  of  the  proprietors  for  a 
term  of  years  on  a  cash  rent.  The  proprietors,  of  course, 
make  the  best  bargains  they  can  with  the  farmers;  the 
farmer  does  the  same  with  the  laborers;  the  result  of 
which  is  that  in  the  country  of  the  greatest  wealth  and 
the  highest  cultivation  the  agricultural  laborers,  farm 
hands,  as  they  are  called,  are  in  a  most  unfortunate  con- 
dition. It  would  be  difficult  to  find  in  any  part  of  Eu- 
rope a  peasantry  as  poorly  fed,  clothed,  and  sheltered 
as  the  workingmen  in  most  of  the  countries  of  England. 
There  is  nothing  in  the  condition  of  the  agricultural  in- 
terests of  Great  Britain  to  alleviate  the  trouble  she  is 
experiencing  in  the  depression  of  her  manufacturing  in- 
dustries. Indeed,  there  is  as  much  complaint  in  her  ag- 
ricultural  districts   as   in   her   manufacturing.     At  th^ 


338 


prices  at  which  farming  lands  are  held  farming  cannot 
be  profitable.  American  grain  growers  and  stock  pro- ' 
ducers  are  able  to  undersell  the  British  farmers  in  their 
own  markets,  and  there  is  now  an  earnest  demand  on 
their  part  for  lower  rents  or  for  a  tariff  on  provisions 
and  breadstuffs,  a  demand  which  landowners  and  the 
Government  will  find  it  difficult,  if  not  impossible,  to 
resist. 

Across  the  channel,  on  the  other  hand,  there  are  local 
causes  which  alleviate  the  depression  resulting  from  the 
revolution  to  which  I  have  referred.  The  industries  of 
France  are  more  diversified  than  those  of  Great  Britain 
and  less  dependent  upon  machinery;  but  a  more  impor- 
tant cause  is  found  in  the  fact  that  the  farm  laborers  of 
France  are  the  owners  of  the  land  the}'  cultivate,  and 
this  is  one  of  the  open  secrets  of  her  prosperity.  Prior 
to  the  great  French  Revolution,  most  of  the  lands  of 
France  were  held  by  the  nobility,  a  nobility  as  oppres- 
sive as  it  was  debased.  This  limited  ownership  of  land 
and  the  oppression  which  grew  out  of  it  was  one  of  the 
causes  of  a  revolution,  which,  violent  and  bloody  as  it 
was,  was  only  commensurate  with  the  evils  of  the  sys- 
tem which  provoked  it.  By  this  revolution  the  founda- 
tion of  land  tenure  in  France  was  broken  up,  first  by 
the  confiscation  and  distribution  of  large  estates,  and 
then  by  a  radical  change  in  the  law  regulating  descents 
and  inheritances.  Landowners  in  France  may  dispose 
of  their  property  in  their  lifetime  as  the}'  may  see  fit, 
but  upon  their  death  their  lands  must  go  to  their  heirs 
in  equal  proportions.  As  a  consequence  of  this,  the 
lands  of  France  are  held  in  small  quantities  by  a  larger 
number  of  independent  land-holders  than  can  be  found 
in  any  other  country  in  the  world.  It  is  this  division  of 
land,  the  interest  in  the  State  thus  created,  that  makes 
a  republican  government  in  France  possible.  Universal 
suffrage  can  only  be  permanently  trusted  where  prop- 
erty is  widely  distributed,  where  a  majority  of  voters 
have  interests  to  be  protected,  and  there  is  nothing  so 
highly  prized  by  the  great  body  of  the  people  nor  so 
conservative  in  its  influence  as  the  ownership  of  land. 
The  education  and  experience  of  the  French  have  not 
been  such  as  are  calculated  to  fit  then;  for  self-gov^ru- 


339 

ment,  but  the  prospects  of  the  republic  are  encouraging, 
and  that  they  are  so  is  attributable,  in  a  large  degree, 
to  the  fact  that  it  has  a  basis  of  widely-distributed  land 
ownership  to  rest  upon.  It  is  true  that  a  minority  of 
the  French  people  are  landowners,  but  they  are  a  strong 
minority,  the  leaning  of  whose  influence  is  felt  through- 
out the  body  politic.  Besides  there  are  few  Frenchmen 
who  are  not  the  owaiers  of  property  of  some  kind. 
France  and  Switzerland  are  the  only  European  coun- 
tries whose  Governments  could  stand  the  test  of  really 
free  elections  with  unlimited  suffrage;  the  only  coun- 
tries in  Europe  in  which  republican  institutions  could 
be  established  with  any  prospects  of  immediate  success. 
Votes  are  a  conservative  power  when  cast  by  men  who 
have  interests  to  look  after  and  to  protect;  in  other 
hands  they  are  dangerous.  The  Government  of  Great 
Britain  is  a  stable  Government,  but  it  is  stable  under 
the  existing  system  of  land  monopoly  because,  although 
a  free  Government,  it  is  not  a  popular  Government. 
The  English  people  are  distinguished  for  their  loyalty, 
loyalty  not  only  to  England,  but  to  the  throne,  no  mat- 
ter what  may  be  the  character  of  the  occupant.  There 
is  something  almost  ridiculous  in  their  loyalty  which 
extends  not  only  to  the  imperial  and  irresponsible  head 
of  the  Government,  but  to  the  nobility.  There  is  a 
feeling  or  sentiment  pervading  the  lower  and  middle 
classes  that  the  lords  and  earls  and  dukes  are  of  better 
blood  than  the  common  people,  that  it  improves  from 
the  knights  who  stand  at  the  bottom  of  the  aristocratic 
ladder  all  the  way  up  to  the  empress  in  whose  veins  it 
courses  in  the  purest  current.  The  loyalty  and  the 
patriotism  of  the  British  people  are  proverbial,  but  the 
most  liberal  government  that  could  now  be  formed  would 
not  dare  to  recommend  universal  suffrage. 

I  am  reminded  here  that  universal  suffrage  prevails  in 
nearly  every  State  in  the  Union,  and  that  in  those  States 
in  which  there  is  a  restriction  upon  it  the  restriction  is 
so  limited  that  it  is  practically  universal.  I  am  re- 
minded, also,  that  the  taxes  on  property  in  the  city  of 
Boston  are  paid  by  one-fifth  of  the  population;  that  four- 
fifths  of  the  voters  pay  only  a  capitum  or  poll  tax,  and 
that  this  tax  is  more  frequently  paid  by  candidates  for 


340 

office  to  secure  their  votes  than  by  themselves,  and  that, 
notwithstanding  all  this,  property  is  as  well  protected 
in  the  United  States  as  in  any  other  country,  and  that 
the  city  of  Boston  is  one  of  the  best  governed  cities  in 
the  world.  It  must  be  admitted  that  universal  suffrage 
has  generally  worked  well  in  the  United  States,  but  it  is 
by  no  means  certain  that  it  will  continue  to  do  so;  the 
time  of  trial  will  come,  when  those  w^ho  have  no  pecuni- 
ary interests  at  stake  shall  be  a  controlling  majority  in 
the  rural  districts,  as  they  are  now  in  the  large  cities, 
and  when,  as  may  be  the  case,  bad  men  are  the  leaders 
of  political  parties.  I  should  feel  that  our  republican 
institutions  rested  upon  a  firmer  basis  than  they  now 
rest  upon,  if  our  agricultural  lands  w^ere  divided  into 
small  holdings.  As  such  a  division  is  likely  to  be  im- 
practicable, the  safety  of  property  and  of  our  republican 
form  of  government  can  only  be  permanently  secured 
by  such  a  property  qualification  for  voting  as  will  prevent 
those  who  have  no  interest  in  the  vState  from  controlling 
its  aff"airs.  If  a  necessity  should  arise  for  a  strong  gov- 
ernment it  will  be  owing  to  unUmited  suffrage. 

Let  us  now"  look  at  some  of  the  causes  which  have 
been  and  are  at  w^ork  in  the  United  States,  and  which, 
in  disturbing  business,  have  been  and  are  prejudicial  to 
labor.  The  most  fruitful  of  these  was  our  late  civil  war. 
The  costliness  of  a  war,  in  which  a  million  of  men  were 
engaged  for  a  good  part  of  four  years — a  war  which  well 
nigh  ruined  some  of  the  most  productive  States  of  the 
Union,  during  which  the  energies  of  the  people  and  the 
w'ealth  of  the  nation  were  devoted  to  the  procurement 
of  supplies  for  the  army  and  navy — can  hardl}^  be  over- 
estimated.  The  unremunerative  outlays  in  the  prosecu- 
tion of  this  great  war  were  sufficient  to  produce  financial 
embarrassment,  which  could  not  have  been  entirely  pre- 
vented if  the  most  prudent  councils  had  prevailed  after 
the  war  was  over.  A  great  w^ar  like  ours  could  not  have 
been  terminated,  the  expenditures  of  the  Government, 
amounting  to  more  than  two  millions  of  dollars  per  day, 
could  not  have  been  suddenly  suspended,  without  a 
shock  to  many  branches  of  industry;  but  I  never  doubted 
that,  if  the  right  policy  had  been  pursued  at  the  close  of 
the  w^ar,  the  country  would   have  escaped   much  of  \h.^ 


341 

disaster  which  subsequently  overwhelmed  it.  This  is  a 
point,  however,  which  I  have  no  disposition  to  discuss. 
There  can  be  no  doubt  that  very  much  of  the  depression 
of  business,  which  has  affected  capital  and  labor  so  seri- 
ously from  the  autumn  of  1873  to  the  commencement  of 
1879,  from  which  the  country  is  slowly  recovering,  may 
be  traced  to  the  war,  to  injudicious  and  speculative  in- 
vestments, to  reckless  borrowing,  and  extravagant  ex- 
penditures. But  other  disturbing  influences  have  been 
and  still  are  at  work  in  the  United  States  which  do  not 
exist  to  any  considerable  extent  in  other  countries.  Let 
us  glance  at  them. 

Business  of  all  kinds  in  the  United  States  is  running 
every  year  into  comparatively  fewer  hands  and  narrower 
channels.  It  is  not  distributed  as  it  formerly  was; 
there  are  many  cities  and  towns  whose  business  and 
population  are  growing  rapidly  where  business  houses 
are  decreasing  in  number.  In  the  city  of  New  York  a 
dozen  firms  are  doing  the  business  which  a  few  years 
ago  would  have  been  distributed  among  a  hundred;  the 
same  is  comparatively  true  in  other  cities.  The  con- 
centrating process  is  everywhere  going  on  at  the  ex- 
pense of  the  many  and  the  advantage  of  the  few.  Day 
laborers  have  been  severely  tried  for  some  years  past, 
many  are  still  suffering  for  want  of  employment,  but 
they  have  not  been  nor  are  they  now  the  severest  suf- 
ferers. These  are  found  among  those  who  have  been 
unsuccessful  in  their  enterprises,  who  have  been  thrown 
out  of  employment  by  the  misfortunes  of  others,  or  who 
have  been  crowded  out  of  business  by  competition. 

Then,  again,  we  have  in  the  United  States  corpora- 
tions which  wield  powers  quite  unknown  in  any  other 
country,  and  which  in  their  efforts  to  make  dividends 
on  fictitious  capital,  reduce  the  wages  of  their  employees 
as  far  as  practicable,  and,  except  at  competing  points, 
burden  production  by  severe  and  discriminating  rates 
for  transportation.  The  granger  organization,  which 
created  so  much  alarm  and  which  was  so  severely  con- 
demned by  the  Eastern  press,  was  a  resistance  of  what 
farmers  considered  the  imposition  of  railroads.  The 
granger  laws  claimed  for  the  State  no  greater  or  dif- 
ferent power  than  that  which  is  reserved  and  exercised 


3'4'i 


by  European  Governments.  The  British  Parliament 
holds  the  power  of  regulating  the  traffic  charges  of  the 
roads  in  the  United  Kingdom,  and  exercises  it  when- 
ever the  public  interests  require  it.  The  grangers 
should  be  permitted  to  explain  their  own  creed,  which 
is  that  railroads  should  be  authorized  to  charge  such 
rates  for  transportation  as  would  give  to  their  stock- 
holders liberal  returns  on  money  invested  but  that 
farmers  and  consumers  vShould  not  be  taxed  to  enable 
them  to  declare  dividends  on  stock  which  is  merely  a 
fiction.  No  such  tremendous  power  was  ever  concen- 
trated in  a  few  hands  as  is  concentrated  in  the  hands  of 
the  men  who  control  the  great  railroad  lines  of  the 
United  States.  Four  gentlemen  control  the  trans- 
portation business  between  the  seaboard  and  the  West; 
they  put  up  or  put  down  rates  at  pleasure.  By  con- 
centration they  can  make  dealing  in  the  productions 
of  the  country  profitable  or  unprofitable.  They  wield 
a  power  which  absolute  monarchs  would  hesitate  to  ex- 
ercise. Three  of  these  gentlemen  are  under  the  control 
of  directors,  who  represent  a  large  number  of  stock- 
holders, but,  as  they  possess  the  confidence  of  both  di- 
rectors and  stockholders,  they  naturally  control  the  af- 
fairs of  thCvSe  great  corporations  and,  to  a  large  degree, 
the  businCvSS  of  the  populous  and  wealthy  regions  through 
which  the  roads  are  constructed.  They  are  able  and 
upright  men,  but  their  aim  is  to  make  money,  and  they 
would  be  more  than  human,  they  would  hardly  be  faith- 
ful to  their  trusts,  if  in  doing  so  they  were  not  more 
careful  of  the  interests  of  their  stockholders  than  of  the 
public  interests.  One  of  these  gentlemen  is  quite  inde- 
pendent of  both  directors  and  stockholders.  Owning  a 
majority  of  the  stock  of  one  of  the  finest  and  best  con- 
structed railroads  in  the  world,  which  runs  through  the 
richest  and  most  populous  State  in  the  Union,  with  sub- 
sidiary lines  which  penetrate  the  fertile  regions  of  the 
West,  he  holds  in  his  hands  a  power  superior  to  that  of 
any  other  private  citizens  in  the  world.  By  combining 
with  the  managers  of  other  trunk  lines,  he  shares  in  the 
control  of  the  traffic  between  the  great  cities  of  the  West 
and  seaboard.  For  hundreds  of  miles,  having  no  com- 
petitor, he  is  able  to  establish  such  rates  of  transportation 


§43 

as  will  enable  him  to  declare  dividends  on  stock   alto- 
gether disproportionate  to  the  cost  of  the  road. 

We  have  another  and  still  more  startling  illustration 
of  legalised  monopoly  in  the  Union  and  Central  Pacific 
railroads.  There  is  an  unpleasant  atmosphere  about  the 
construction  of  these  roads  which  I  am  not  disposed  to 
disturb.  It  is  sufficient  to  say  that  there  was  no  perma- 
nent investment  of  money  by  the  stockholders  of  either. 
They  were  not  only  built  by  the  subsidies  of  the  Gov- 
ernment and  the  loans  made  upon  the  donated  property, 
but  there  was  an  excess  of  millions  which  went  into  the 
pockets  of  contractors  who  were  also  stockholders  and 
directors.  Four  men  own,  subject  to  the  liens  upon  it, 
and  absolutely  control  the  western  division  of  this  great 
thoroughfare,  a  thousand  miles  of  railroad,  for  which 
they  have  paid  nothing  and  out  of  which  they  have 
realized  millions.  Not  only  are  they  the  owners  of  the 
Central  Pacific  Road,  but,  by  the  profits  which  they  have 
made  and  are  making  out  of  it,  and  the  sale  of  a  small 
amount  of  bonds,  they  are  building  a  Southern  Pacific 
Road,  now  completed  to  Arizona,  and  other  lines,  by 
which  they  are  controlling  the  larger  part  of  traffic  of 
the  Pacific  Coast.  Owning  all  the  approaches,  except 
on  the  north,  to  the  magnificent  bay  of  San  Francisco, 
they  have  no  fear  of  competition.  Secured  in  their 
chartered  rights,  there  can  be  no  interference  with  their 
liberal  privileges.  Unrestrained  in  their  traffic  charges, 
except  by  their  own  discretion  and  regard  for  their  own 
interest,  they  control  the  transportation  of  the  produc- 
tions and,  in  no  small  measure,  the  labor  of  a  country 
vast  enough  and  rich  enough  for  an  empire.  They  are 
highly  respectable  and  honorable  gentlemen,  but  they 
are  clothed  with  a  power  which  no  government  should 
delegate  to  its  citizens.  The  adoption  of  the  new  con- 
stitution of  California,  framed  in  antagonism  to  capital,  is 
mainly  attributable  to  the  opposition  of  farmers  and  of 
the  traders  in  the  interior  towns  to  the  management  of 
her  railroads.  There  were  other  influences  at  work,  but 
it  will  be  noticed  in  looking  over  the  returns  that  the 
heaviest  vote  in  favor  of  the  constitution  was  in  the 
agricultural  districts.  It  required  a  great  combination 
of  influences,  among  which  opposition  to  Chinese  im- 


844 


migration  was  not  the  least  potent,  to  sustain  such  a 
constitution,  and  it  is  ver}-  certain  that  it  would  not  have 
been  approved  b}^  the  people  had  it  not  been  for  the 
opposition  of  the  farming  interest  to  railroad  monopol}-. 
This  constitution,  if  ever  made  effective  by  legislation, 
must  be  injurious  to  the  laboring  classes,  who  vainly  ex- 
pect that  their  condition  will  be  improved  by  it;  it  will 
also  make  manifest  the  necessity  of  proper  governmental 
control  of  the  railroad  companies  of  the  vState.  Legal- 
ized monopolies  in  the  United  States  are  inconsistent 
with  the  interests  of  the  people  and  the  spirit  of  our  in- 
stitutions. Corporations  are  useful  in  all  countries;  they 
are  indispensable  in  the  United  States,  whose  growth 
has  been  largely  dependent  upon  them,  but  the  privi- 
leges which  they  possess,  and  which  may  be  needful  for 
the  accomplishment  of  the  objects  for  which  they  are 
organized,  are  subject  to  abuses.  They  should  never  be 
independent  of  the  government  by  which  their  charters 
are  granted. 

There  is  another  influence,  and  not  the  least  power- 
ful, in  disturbing  industry  and  business  in  the  United 
States — politics.  By  politics  I  do  not  mean  the  science 
of  government,  nor  the  contest  between  parties  over  any 
question  of  governmental  policy,  but  party  contests  for 
political  supremacy  and  for  the  power  and  emoluments 
of  office.  Politics,  in  this  sense  of  the  word,  is  a  great 
absorbent  in  the  United  States;  it  is  dangerous,  because 
it  is  corrupting.  Financial  questions,  revenue  questions, 
the  labor  question,  are  considered  not  with  regard  to 
their  bearings  upon  the  public  interests,  but  with  regard 
only  to  the  use  that  may  be  made  of  them  in  elections. 
There  are  hopeful  indications  that  these  great  questions 
will  not  long  be  kept  in  the  background  or  made  sub- 
servient to  party  interests,  but  this  is  their  unfortunate 
condition  now.  A  stranger  reading  the  great  newspapers 
of  the  United  States,  great  by  the  energy  and  ability 
which  they  display,  great  by  the  influence  which  they 
wield,  a  stranger  reading  these  papers  would  conclude 
that  there  were  no  questions  of  importance  to  the 
country,  except  purely  party  questions.  Who  shall  be 
the  next  President?  Who  shall  be  Senators  or  Repre- 
sentatives in  Congress?     Who  shall  be  Governors?     In 


UH 


a  word,  which  party  shall  have  the  control  of  the  Federal 
and  State  governments  ?  Financial  questions  and  revenue 
questions  have  of  late  engaged  public  attention,  and 
there  have  been  contests  over  them  in  some  States,  but 
a  fair  and  free  discussion  of  them  has  for  a  long  time 
been  prevented  by  the  doubts  of  political  leaders  as  to 
the  direction  which  the  current  might  take.  As  I  said 
in  my  last  lecture,  there  is  not  a  member  of  the  present 
Congress  who  was  elected  with  regard  to  his  views  on 
economic  questions.  The  disturbing  power  of  politics 
just  now  prevents  also  the  consideration,  upon  their 
merits,  of  questions  involving  the  rights  and  interests  of 
the  colored  people  of  the  South.  While  there  is  a  strong 
sympathy  felt  throughout  the  North  for  the  colored 
people  of  the  South,  party  politics  have  had  a  good  deal 
to  do  in  giving  it  a  wrong  direction.  The  social  condi- 
tion of  the  colored  people  of  the  South  and  their  con- 
dition as  laborers  is  a  matter  of  deep  concern,  not  onlj^ 
to  the  South,  but  to  the  whole  country,  and  it  is  exceed- 
ingly unfortunate  that  their  condition  in  these  respects 
should  be  affected  by  a  sectional  contest  for  the  control 
of  their  votes.  It  seems  to  be  hardly  possible  that  any 
sensible  man  could  have  supposed  that  people  who  all 
their  lives,  and  their  ancestors  for  many  generations, 
had  been  subject  to  the  social,  mental,  and  moral  deg- 
radations of  absolute  servitude,  could  become,  by  eman- 
cipation, independent  voters;  that  the  foundation  upon 
which  the  social  and  industrial  fabric  of  the  South  rested 
could  be  broken  up;  that  slavery,  which  was  to  have 
been  the  corner-stone  of  the  Confederacy  if  its  indepen- 
dence had  been  achieved,  could  be  brought  to  a  sudden 
termination  without  social  and  political  disorder,  with- 
out heartburning  and  strife.  So  far  ought  we  to  be  from 
being  surprised  that  harmonious  relations  do  not  exist 
between  those  whose  former  relations  were  so  different, 
that  our  surprise  should  be  that  both  races  are  adapting 
themselves  to  their  changed  relations  as  rapidly  as  the}^ 
are.  That  the  colored  vote  would,  to  a  large  extent,  be 
influenced,  if  not  controlled,  b}-  the  superior  intelligence 
and  wealth  of  the  whites  and  that  what  would  be  re- 
garded sectional  interference  would  unifythe  white  voters 
is  what  everybod}^  ought  to  have  anticipated.     That  this 


346 


vote  should  not  be  a  unit  upon  questions  affecting  the 
general  welfare  of  the  countr}^;  that  there  should  be  no 
solid  South  or  solid  North  in  opposition  to  each  other 
upon  political  issues,  and  social  and  economic  problems 
growing  out  of  emancipation,  is  what  the  interests  of  all, 
and  especially  those  of  the  colored  people,  require.  That 
such  a  condition  of  things  will  sooner  or  later  be  brought 
about  there  can  be  no  question;  the  retardation  of  it 
will  be  the  result  of  party  efforts,  for  party  purposes,  to 
fan  the  sleeping  embers,  not  yet  quite  extinguished,  of 
former  antagonisms.  The  solidarity  of  the  South  before 
the  war  was  upon  the  slave  question ;  in  defense  of  slaver}^ 
it  was  a  unit;  upon  other  subjects  it  was  divided,  as  it 
will  be  again  when  these  subjects  come  to  the  front. 

The  colored  people  of  the  South  must  be  protected  in 
the  exercise,  to  the  fullest  extent,  of  their  political 
rights;  for  all  else  they  must  depend  upon  themselves. 
The  emigration  from  Louisiana  and  Mississippi,  which 
has  attracted  so  much  attention,  will,  I  fear,  prove  to  be 
imprudent,  if  not  disastrous,  to  a  majority  of  the  emi- 
grants. These  States  suffered  severely  last  year  from  a 
pestilence;  that  from  which  there  is  the  largest  exodus 
is  the  one  in  which  party  contests  have  been  the  severest; 
but  it  seems  to  be  hardly  possible  that  the  condition  of 
the  colored  people,  even  in  Louisiana,  w^here  their  suf- 
ferings from  the  pestilence  have  been  aggravated  by 
party  strife,  could  have  been  so  wretched  as  to  compel 
them  to  leave  their  homes  and  to  become,  for  a  time, 
dependents  upon  the  charity  of  the  people  of  other  States. 
If  they  left  because  they  could  not  obtain  employment 
where  the}-  were  and  expected  to  improve  their  condi- 
tion by  emigrating  to  Kansas,  nobody  has  a  right  to 
complain  except  those,  perhaps,  who  are  compelled  to 
contribute  to  their  relief;  but  if  they  were  forced 
to  leave  by  reason  of  oppression,  not  only  should  hu- 
manity, but  the  assistance  of  the  Government,  be  in- 
voked in  their  behalf.  Kansas  is  not  the  promised  land 
for  the  colored  people.  Their  home  is  the  South.  They 
should  remain  where  their  services  are  most  needed 
and  are  the  most  likely  to  be  properly  remunerative,  in 
a  climate  the  best  suited  to  their  constitutions  and  their 
enjo3'ment  of  life.     The  labor  of  the  colored  people  has 


347 

made  the  South  what  it  is;  thej'  are  not  likely  to  be  the 
gainers  by  leaving  it.  The  interests  of  the  two  races 
in  the  States  from  which  the  exodus  has  been  taking 
place  are  dependent  upon  each  other.  This  natural  de- 
pendence, if  left  to  itself,  will  do  more  than  all  outside 
pressure  can  affect  to  secure  to  the  colored  people  of 
the  South  their  personal  and  political  rights.  I^abor  is 
a  power  in  this  country  of  ours,  and  nowhere  is  its 
power  greater  than  in  the  Southern  States.  Some  com- 
pensation for  the  evils  which  must  result  from  this  exo- 
dus may  be  found  in  the  lesson  it  will  teach  the  planters 
of  their  dependence  upon  the  labor  they  no  longer  own, 
but  I  think  Mr.  Douglass  is  right  in  the  view  which  he 
takes  of  this  exodus  from  the  South.  The  colored  peo- 
ple are  an  eminently  social  people;  they  are  happier 
when  together  than  they  can  be  when  scattered  among 
the  whites.  They  need  companionship,  which  they  can 
only  find  among  themselves.  A  few  of  them  have  gone 
to  California  and  are  employed  there  as  servants  in  ho- 
tels and  in  private  families.  A  couple  of  years  ago  I 
had  a  free  talk  wnth  some  of  them  whom  I  had  known 
seven  or  eight  years  before.  They  w^ere  well  cared  for 
and  well  paid,  but  they  were  restless  and  unhappy. 
The  climate  of  California  was  agreeable  to  them,  but 
they  wanted  to  go  back  to  Washington,  where  they  could 
have  a  societ}^  of  their  own. 

The  labor  of  the  colored  people  is  indispensable  to 
Southern  planters,  and  there  is  a  power  in  their  votes 
over  Southern  politicians  which  they  will  soon  know 
how  to  wield.  The  time  is  not  far  distant  when,  divided 
as  the  South  will  be  upon  questions  which  are  not  sec- 
tional, their  votes  will  be  as  much  courted  by  candi- 
dates for  office  as  the  votes  of  Irishmen  and  Germans 
are  by  candidates  in  the  North.  But  whatever  views 
may  be  taken  of  the  causes  which  have  produced  emi- 
gration of  the  colored  people  from  their  old  homes,  all 
must  agree  that  it  disturbs  industry,  and  that  it  must, 
for  a  time  at  least,  affect  injuriously  the  labor  of  the 
South  and  the  interests  of  Southern  capital.  If  I  had 
advice  to  give  the  Southern  colored  people,  it  would  be 
the  same  that  Sumner  gave  to  Stanton  in  a  single  word, 
stick.     I  w^ould   say  to  them,  stick  and  fight  it  out  on 


M^ 


your  own  line,  if  it  takes  not  only  next  summer,  but  a 
dozen  summers. 

I  have  thus  directed  attention  to  certain  general  causes 
which  have  brought  about,  or  at  least  have  contributed 
to  bring  about,  the  depression  which  prevails  in  other 
countries  and  to  some  extent  in  our  own — a  depression 
which  affects  both  labor  and  capital — and  alluded  to 
certain  influences  adverse  to  general  prosperity,  and  to 
labor,  which  are  peculiar  to  the  United  States.  The 
question  now  arises,  What,  if  anything,  can  be  done  in 
our  own  countr}-  to  remove  the  obstructions  which  lie 
in  the  wa}-  of  returning  prosperit}^  ?  It  is  perfectly  clear 
that  the  interests  of  capital  and  labor,  employers  and 
employees,  are  inextricably  united.  There  have  been 
and  there  always  will  be  conflicts  between  them,  but 
there  is  such  a  union  of  interests  that  they  must  always 
suffer  or  prosper  together.  Both  are  exacting;  both  are 
apt  to  be  arbitrary  in  their  exactions.  Capitalists  re- 
duce wages  without  consulting  laborers;  laborers  strike 
for  higher  wages  without  consulting  capitalists.  Each 
is  entitled  to  a  proportion  of  the  joint  productions,  but 
there  can  be  no  umpire  to  decide  what  that  proportion 
shall  be.  The  laborer  must  live;  the  capitalist  must 
make  his  business  profitable  or  abandon  it.  Who  shall 
decide  how  well  the  laborer  should  live  and  how  much 
he  should  be  able  to  accumulate  for  protection  against 
his  being  a  charge  upon  the  State,  when  incapacitated 
for  work,  or  the  profits  which  the  capitalist  should  be 
entitled  to  on  his  present  business,  or  what  his  accumu- 
lations should  be,  in  order  that  provision  should  be  made 
for  the  contingencies  to  which  all  business  is  subject? 
These  are  points  which  no  one  can  decide.  The}'  could 
not  be  decided  if  the  contestants  were  upright  and  im- 
partial and  the  decision  were  left  to  themselves.  Some- 
thing has  been  accomplished  by  arbitration,  but  it  is  not 
often  that  both  agree  to  arbitrate  and  upon  an  arbitrator, 
and  when  arbitration  is  resorted  to  the  decision  is  rarely 
satisfactory  to  both;  perhaps,  in  the  majority  of  cases, 
it  is  not  satisfactory  to  either.  Fortunately,  the  power 
of  neither  is  absolute.  Neither  can,  for  any  considerable 
time,  be  oppressive  to  the  other.  When  labor  is  abund- 
ant the  capitalists  ma}'  unjustly  reduce  wages;  when  it 


349 

is  scarce  they  may  be  forced  to  pay  more  than  they  can 
afford  to  pay.  vSnch  advantages  on  one  side  or  the  other 
are  not  of  frequent  occurrence,  and  when  they  do  occur 
they  are  not  of  long  continuance;  the  law  of  supply  and 
demand  is  always  at  work  and  it  is,  perhaps,  the  only 
effective  regulator  of  all  such  competing  interests.  It 
is  very  certain  that  the  agencies  which  have  been  re- 
sorted to,  to  wrest  from  capital  what  labor  demanded  as 
its  rights,  have  not  been  beneficial  to  the  laborer.  The 
trades  unions  were  organized  for  wise  and  humane  pur- 
poses, but  they  have  signally  failed  to  accomplish  the 
objects  of  their  formation;  in  undertaking  to  regulate 
wages  they  have  undertaken  the  impossible;  in  encour- 
aging and  for  a  time  sustaining  strikes  they  have  injured 
employers  and  laborers  alike;  under  intelligent  and  hon- 
est direction  they  have  been  of  little  service  to  the  work- 
ing men;  under  the  direction  of  bad  men  they  have  been 
potent  agencies  of  mischief. 

It  is  hardly  necessary  that  I  should  speak  of  com- 
munism and  socialism,  of  the  influence  and  power  of 
which  some  apprehension  has  been  felt.  Communism, 
as  taught  by  its  early  advocates,  is  beautiful  in  theory, 
but  it  is  impracticable.  It  implies  the  existence  of 
qualities  in  mankind  which  do  not  exist.  Independence, 
superiority,  power,  are  what  men  naturally  strive  for. 
There  is  nothing  in  human  nature  upon  which  commun- 
ism can  rest;  it  is  harmless,  because  it  is  both  peaceful 
and  unnatural. 

Socialism  is  of  a  different  character  and  not  easy  of 
definition;  it  embraces  the  disaffected  of  all  classes.  Its 
object  seems  to  be  to  destroy,  not  to  build;  not  to  en- 
courage industry,  but  to  deprive  it  of  its  accumulations. 
It  is  a  foe  to  the  existing  order  of  things,  which  it  de- 
nounces as  being  in  the  interest  of  capital  and  against 
labor.  It  would  equalize  by  a  disruption  of  the  princi- 
ples which  held  society  together.  It  manifested  its 
spirit  in  the  wanton  destruction  of  property  at  Pitts- 
burg two  years  ago.  It  ceases  to  be  potent  as  soon  as 
it  is  unmasked;  it  can  never  be  formidable  under  the 
free  institutions  of  the  United  States. 

It  follows  from  what  I  have  said  that  capital  and  labor, 
joined  together  by  common  interests,  must  be  left  to  ad- 


350 

just  their  own   controversies  by   themselves;   that   both 
are   prejudiced   by  what   is  prejudicial    to   either,    and 
that  their  aim  should  be   to   remove   all  obstructions  in 
the  way  of  their  common   prosperity.     In   this   and  in 
previous  lectures  I  have  referred   to  the   causes  of  the 
industrial  depression  throughout  the  world  and  to  local 
causes  in   the  United  States.     In  doing  so,  I  have  sug- 
gested the   remedies  which  have  seemed   to  me  to  be 
within   our  reach.     As  wdiatever  tends   to  retard  pro- 
gress, to  check  enterprise,  to  lessen  the  rewards  of  well- 
directed  industry,  is   hostile  both  to   capital   and  labor, 
my  object  has  been   in  each  lecture   to  direct  attention 
to  the  impediments  in   the  way   of  general   prosperity. 
I  have   referred   to  some   adverse   influences  which,  al- 
though  prejudicial   to    many    important    interests,    will 
become  eventually   beneficial.     I  have   directed   atten- 
tion  especially   to   the  causes  which  produced   the  de- 
pression in  the  United  States  and  to  the  obstructions  to 
prosperity  which  still   exist,  and  for  the  existence  and 
continuance  of  which  the  Government  is  responsible.    It 
is  not  the  duty  of  a  republican  government  either  to  reg- 
ulate business  or  to  find  employment  for  labor,  but  it  is 
its  duty  to  relieve  industry  from  all  unnecessary  burdens 
and  to  modify  or  repeal  all  laws  that  block  the  way  to 
more  prosperous  times.     I  have  already  intimated  in 
general  terms  what   I   thought  should   be  done  by  the 
Government.     I  must  ask  indulgence  w^hile  I  briefly  and 
in  conclusion  recapitulate  the  measures  which  I  regard 
as  being  especially  important: 

Firstly.  A  day  should  be  fixed,  sufficiently  remote  to 
allow  the  banks  to  supply  themselves  with  coin,  after 
which  the  United  States  notes  should  cease  to  be  a  legal 
tender,  and  provision  made  for  their  being  withdrawn 
from  circulation  as  speedily  as  the  condition  of  the  Treas- 
ury, under  an  economical  administration  of  the  Govern- 
ment and  a  judicious  revenue  system,  would  permit. 
My  objection  to  these  notes  as  money  was  presented  at 
length  in  my  second  lecture.  I  would  now  only  say,  in 
addition  to  what  I  have  said,  that  I  do  not  think  there  is 
any  good  reason  to  apprehend  that  the  passage  of  such 
an  act  would  depreciate  the  notes  and  inflict  loss  upon 
the  holders.     As  they  would  still  be  receivable  for  all 


351 

Government  dues,    except  duties  upon  imports,    there 
would  be  a  sufficient  demand  for  them  to  prevent  depre- 
ciation; besides,    it  would  be   the   duty  of  Congress  to 
prevent  their  depreciation  by  making  them  convertible 
into  four  per  cent,  bonds,  if  their  receivability   for  Gov- 
ernment dues  should  be    insufficient.     The   additional 
interest  which   the   Government  would  have  to  pay  by 
their  conversion  into  interest-bearing  bonds  is  not  worth 
considering,  in   comparison  with  the  benefits  which  the 
country  would  derive  from  the  withdrawal  of  a  false  and 
unstable  measure  of  value  and  the  disconnection  of  the 
Government  from  the  business  of  banking.     It  is  quite 
clear,  however,  that  the  popular  objection  to  the  retire- 
ment of  these  notes  is  not  that  the  bonded  debt  would 
be  thereby  increased,  but  that  the  volume  of  circulation 
would  be  reduced.      It  is  contraction  which  is  especially 
dreaded,  and  dreaded  without  cause.     There  is  not  the 
slightest  danger  of  insufficient  currency  in   the  United 
States;  the   tendency  has  always  been  and  probably  al- 
ways will  be  towards  an  over  supply.     There  has  never 
been   a  deficiency   of  paper  currency  in  this  country. 
There   has   never  been  contraction  which  was  not  the 
necessary  consequence,  the  natural  and  inevitable  result 
of  expansion.     As  long  as  the  national  banking  system 
exists,  and  under  any  banking  system  that  may  follow 
it,  there  will  be  no  failure  in  the  supply  of  bank-notes. 
Not  only  is  there  no  reason  to  fear  that  there  would  be 
injurious  contraction  by  the  retirement  of  United  States 
notes,  but  it  is  by  no  means  certain  that  there  would  be 
if  all  the  paper  money  of  the  country  were  to  be  gradu- 
ally withdrawn.     Paper  money  is  a  convenient  and  bene- 
ficial supplement  to  coin;    it  is  not  a  necessity  in  any 
rich  and  prosperous  country;  it    constitutes  only  a  fifth 
part  of  the  circulating  medium  of  France,  whose  financial 
system    is,  on   the  whole,   the   most  perfect  of   any   in 
Europe.     While  bank-notes  are  a  great  convenience  and 
a  positive  service  in  all  commercial  countries,  I  do  not 
doubt  that  within  a  period  of  ten  years  gold  and  silver 
might  take  the  place  of  paper  in  the  United  States,  with- 
out disturbance  of  business  or  reduction  of  prices.   There 
can  hardly  be  a  greater  error  than  the  supposition   that 
the  interests  of  the  country  are  dependent  upon  a  paper 


352 


currency,  or  that  industry  would  be  revived  and  the  wel- 
fare of  the  laboring  man  promoted  by  an  increase  of  its 
volume.  The  paper  circulation  is  now  more  than  three 
times  greater  than  it  was  in  i860,  and  yet  that  was  a  very 
prosperous  year  compared  with  187S.  The  immense  vol- 
ume of  currency  in  circulation  had  no  power  to  prevent  the 
crisis  of  1873  or  the  general  decline  of  prices  which  fol- 
lowed it.  If  a  bountiful  supply  of  paper  currency  would 
make  a  countr}^  prosperous,  the  United  States  would  be 
prosperous  indeed.  What  the  country  now  needs,  as 
far  as  the  financial  question  is  concerned,  is  confidence 
in  the  policy  of  Congress;  confidence  that  this  policy 
will  be  the  policy  which  was  interrupted  by  the  war,  the 
time-honored  policy  which  recognized  nothing  but  gold 
and  silver  as  money,  and  tolerated  no  currency  which 
was  not  convertible. 

Secondly.  All  small  notes  should  be  withdrawn  from 
circulation  and  the  coinage  of  silver  continued  as  long 
as  it  can  maintain  a  parity  with  gold.  All  efforts  to  in- 
crease the  circulation  of  silver  without  a  withdrawal  of 
small  notes  will  be  in  vain.  To  what  extent  silver  can 
be  coined  without  a  depreciation  of  it  can  be  better  de- 
termined hereafter  than  now.  It  would  not  be  subject 
to  depreciation,  no  matter  what  might  be  the  policy  of 
other  nations,  as  long  as  it  merely  took  the  place  of 
paper  and  was  actually  needed  in  the  domestic  trade. 
If  the  coinage  should  be  continued  under  existing  law 
and  the  paper  circulation  should  not  be  correspondingly 
reduced  it  would  at  no  distant  day,  as  it  did  under  the 
act  of  1792,  drive  gold  out  of  circulation  and  out  of  the 
country.  But  while  I  regard  it  as  being  a  matter  of 
very  great  importance  that  such  a  limitation  should  be 
put  upon  the  coinage  of  silver  as  would  prevent  it  from 
banishing  gold,  the  Government  should,  through  its 
ministers,  express  to  the  leading  European  States  its  wil- 
lingness and  desire  to  unite  with  them  in  making  gold 
and  silver  a  joint  standard  of  value,  with  unlimited  coin- 
age of  both. 

Thirdly.  The  national  banking  system  should  be  sus- 
tained, not  in  the  interest  of  the  banks,  but  of  the  people, 
as  being  the  best  system  yet  devised  for  the  security  of 
a  bank-note  circulation. 


853 

Fourthly.  That  the  tariff  should  be  thoroughly  re- 
vised, and  that  all  restrictions  upon  foreign  commerce 
not  absolutely  necessary  for  revenue  purposes  be  re- 
moved, to  the  end  that  consumers  may  not  be  taxed  for 
the  benefit  of  monopolies,  and  that  our  foreign  trade 
may  be  increased. 

Fifthly.  That  while  corporations  should  be  protected 
in  their  corporate  rights,  they  should  be  subject  to  the 
supervision  and  control  of  the  Government  and  the  States 
by  whose  authority  they  were  created,  so  that  the  public 
interests  may  not  be  subordinated  to  their  interests. 

Sixthly.  The  financial  and  economical  questions,  the 
great  questions  which  underlie  the  prosperity  of  the 
country,  should  be  considered  with  regard  to  their  bear- 
ing upon  the  interests  of  the  country,  and  not  upon  the 
interests  of  a  party.  It  is  not  expected  that  politics  will 
ever  be  so  elevated  as  to  become  really  the  science  of 
government,  but  it  would  be  an  immense  gain  if  such 
questions  should  be  considered  and  treated  as  questions, 
in  which  the  members  of  all  parties  are  alike  interested. 
That  this  is  not  impossible  is  proven  by  the  fact  that 
although  in  Great  Britain  the  contests  for  the  control  of 
the  government  between  Liberals  and  Conservatives  are 
as  violent  and  bitter  as  in  the  United  States,  one  hears 
very  little  about  financial  or  commercial  questions,  al- 
though these  are  the  questions  of  paramount  importance. 
There  are  diff"erences  of  opinion  among  the  voters  in  re- 
gard to  them,  but  they  are  not  mixed  up  with  party  con- 
tests; they  are  considered  by  the  party  in  power  when 
a  change  is  supposod  to  be  necessary,  and  the  decision 
which  is  reached  is  rarely  disturbed  by  a  change  of  ad- 
ministration. Industry  and  enterprise  in  the  United 
States  are  greatly  embarrassed  by  the  uncertainty  which 
prevails  in  regard  to  the  action  of  the  Government  upon 
subjects  in  which  all  are  interested.  Business  men  feel 
as  sailors  would  feel  if,  although  upon  a  good  ship,  but 
far  from  land,  they  had  neither  chart  nor  compass  to 
direct  them. 

I  regret  that  I  have  not  been  able  to  discuss  with  more 
ability  than  I  have  done  the  questions  to  which  I  have 
directed  your  attention.  Something,  however,  has  been 
gained   if  I  have  excited  an  interest  in  them  which  may 


354 


have  been  heretofore  dormant.  They  are  all  very  im- 
portant questions,  the  live  questions  of  the  day,  in  which 
all  are  interested,  whether  conscious  of  it  or  not;  ques- 
tions in  regard  to  which  no  uncertain  sound  should  go 
forth  from  our  educational  institutions.  At  the  head  of 
these  institutions  and  under  the  direction  of  one  who 
combines  what  are  so  rarely  found  united,  extensive 
learning  and  great  executive  ability,  soon  to  become  a 
university  in  the  most  compreheUvSive  meaning  of  the 
word,  stands  Harvard.  Herpositionisa  very  important 
and  responsible  one,  and  she  will  be  recreant  to  her 
history,  to  all  her  inspiring  traditions,  if  her  influenceis 
not  felt  from  year  to  year,  with  constantly  increasing 
power,  throughout  the  length  and  breadth  of  the  land, 
in  giving  proper  direction  to  the  public  sentiment  upon 
all  questions  affecting  the  honor  of  the  Government  and 
the  welfare  of  the  people. 


LETTER 

ADDRESSED    TO 

THE  BANKERS'  ASSOCIATION,  AT  SARATOGA 
SPRINGS,  AUGUST,  1884, 


ADDRESSED    TO 

THE  BANKERS'  ASSOCIATION,  AT  SARATOGA 
SPRINGS,  AUGUST,  1884. 


Mr.  President  and  Gentlemen  of  the  Com'ention  t 

Questions  of  great  public  interest  cannot  be  too  freely 
discussed,  although  those  who  participate  in  the  discus- 
sion may  say  nothing  new.  It  is  this  consideration  that 
induces  me  to  send  you  this  communication. 

The  excellence  of  the  national  banking  system  has 
been  proved  by  a  trial  of  more  than  twenty  years.  It 
has  done  all  that  its  warmest  advocates  expected.  It 
has  given  to  the  country,  what  it  never  had  before,  and 
greatly  needed,  a  bank-note  circulation  perfectly  secured 
and  current  throughout  the  Union.  It  has  done  more, 
it  has  shown  that  there  can  be  a  great  national  banking 
system  without  the  centralized  power  of  a  national  bank, 
and  free  from  partisan  politics.  It  has  not,  it  is  true,  in 
all  cases,  protected  depositors  from  losses.  This  has 
never  been  done  and  never  can  be,  under  any  system  of 
banking;  but  it  is  safe  to  say  that  the  losses  of  depos- 
itors by  the  failure  of  national  banks — enormously  as 
deposits  have  been  increased  within  the  last  twenty 
years — have  been  much  less  than  they  were  under  the 
system  (if  it  might  be  called  a  system)  that  preceded  it. 
That  it  has  not  been  more  effective  in  this  direction  is 
attributable  to  the  fact  that,  while  in  the  management 
of  the  Bureau  party  politics  have  been  ignored ,  the  Comp- 
troller has,  in  some  instances,  been  forced  to  yield  his 
better  judgment  in  the  appointment  of  examiners  to  the 
pressure  of   politicians,   who   have  had   friends    to  be 


858 

served  or  supporters  to  be  rewarded.  To  be  a  compe- 
tent examiner  of  banks,  especialh^  of  the  large  banks  in 
our  commercial  cities,  a  man  should  have  qualifications 
which  very  few  men  possess.  He  should  have  a  thor- 
ough knowledge  of  practical  banking.  He  should  be  a  man 
of  strong  will  and  perfect  integrity.  He  should  be  a  hard 
worker,  and  so  keen  and  thorough  in  his  investigations 
as  to  render  imposition  difficult,  if  not  impossible.  He 
should  be  able,  as  some  men  are,  to  tell  by  the  bearing 
of  the  officers  of  a  bank,  and  even  its  very  atmosphere, 
whether  it  is  faithfully  or  unfaithfully  managed,  before 
he  examines  it.  Having  had,  in  years  long  passed,  a 
good  deal  of  experience  in  the  examination  of  banks,  I 
know  how  difficult  of  performance  the  duties  of  a  bank 
examiner  are,  and  what  his  qualifications  should  be.  To 
select  examiners  of  the  right  kind,  no  one  is  so  compe- 
tent as  the  Comptroller  ought  to  be,  and  no  one  has  so 
deep  an  interest,  as  far  as  reputation  is  concerned,  as 
himself,  in  the  manner  in  which  their  duties  are  per- 
formed. It  is  by  him  that  examiners  are  appointed. 
They  are  his  agents  and  he  is  to  some  extent  responsible 
for  their  incompetency  or  neglect.  He  should ,  therefore, 
be  perfectly  independent  of  all  outside  influences  in 
making  appointments.  This,  I  apprehend,  has  not 
always  been  the  case,  and  to  this  is  attributable,  to  a 
large  extent,  the  fact  that  the  examinations  of  the  na- 
tional banks  have  not  been,  in  all  instances,  as  intelligent 
and  searching  as  they  ought  to  have  been.  Still,  as  I 
have  said,  the  national  banking  system  has  done  all  and 
more  than  its  advocates  expected.  By  superseding  the 
State  banks,  upon  which,  without  it  the  Government 
would  have  been  compelled  to  rely  in  the  late  civil  war 
for  a  bank-note  currency,  it  did  much  to  save  the  Gov- 
ernment from  bankruptcy,  and  it  has  for  nearly  a  quarter 
of  a  century  furnished  the  country  with  bank-notes  on 
which  no  loss  has  been  or  ever  can  be  sustained.  I  did 
not,  however,  commence  writing  this  letter  for  the  pur- 
pose of  eulogizing  the  national  banking  system,  but  of 
speaking  very  briefly  of  the  dangers  which  threaten  its 
perpetuity.  Its  great  value,  nay,  its  very  existence,  de- 
pends upon  the  security  of  the  notes  issued  by  the  banks 
which  are  organized  under  it.     This  security  consists  of 


^51^ 


Government  bonds  which  are  deposited  with  the  Treas- 
urer in  Washington.  Nothing  else  will  answer  the  pur- 
pose. Bank-notes  should  alwa3^s  be  redeemable  in  coin, 
but  they  would  never  be  issued  if  the}'  were  to  be  pro- 
tected b}^  an  equal  amount  of  coin  in  the  vaults  of  the 
banks.  They  must,  to  a  large  extent,  be  based  upon 
credit,  and  there  can  be  no  credit  reliable  enough  for 
the  basis  of  a  national  paper  currency,  except  the  na- 
tional credit.  Nothing,  therefore,  but  the  bonds  of  the 
Government  can  perfectl}'  secure  a  national  bank  circu- 
lation. Of  these  bonds  the  national  banks  are  being 
rapidly  deprived,  and  will  be  soon  deprived  altogether, 
unless  the  public  revenues  are  largely  reduced.  The 
public  sentiment  seems  to  demand  an  extinguishment  of 
the  public  debt  as  soon  as  the  condition  of  the  Treasury 
will  permit  it;  but  so  highly  is  the  national  banking 
system  approved  by  the  business  men  of  the  country,  so 
essential  has  its  maintenance  become  to  our  national 
prosperity,  so  entwined  is  it  with  both  public  and  private 
interests,  that  the  sentiment  in  favor  of  the  extinguish- 
ment of  the  debt  would  doubtless  be  satisfied  with  a 
irdnction  of  it  to  such  an  amount  as  would  be  7iecdful  to 
secure  a  bank-note  circulation,  were  it  not  for  the  recent 
decision  of  the  Supreme  Court  on  the  legal-tender  ques- 
tion, which  throw^s  a  dark  cloud  over  the  financial  out- 
look. It  is  not  for  me  to  criticise  that  decision.  The 
justices  of  that  court  are  among  my  personal  friends.  I 
have  the  highest  respect  for  their  characters  and  legal 
acquirements.  This  much,  however,  I  cannot  forbear 
to  sa}^:  It  is  a  decision  which  fails  to  command  the  ap- 
proval of  the  best  legal  minds  of  the  country.  It  clothes 
Congress  wdth  hvipekial  powder — the  power  which  the 
framers  of  the  Constitution  manifestlj^  intended  to  with- 
hold. It  announces  a  new  doctrine,  that  Congress,  in- 
stead of  being  limited  to  the  exercise  of  enumerated 
powers,  may  do  anything  and  everything  which  the  Con- 
stitution does  not  absolutely  prohibit.  Indeed,  if  by  its 
authority  to  coin  and  borrow  mone}^  Congress  can  author- 
ize the  issue  of  Government  notes  as  money,  it  is  dif- 
ficult to  see  what  power  does  not  constitutionally  belong 
to  it.  Discussion  of  this  question,  however,  is  now  of 
no  avail.     It  is  now  the  law  that  Congress,  in  the  exer- 


H60 


cise  of  its  own  discretion,  may  authorize  the  issue  of 
legal-tender  notes  at  all  times  and  to  any  amount.  Such 
is  the  decision  of  the  Court,  from  whose  decision  there 
is  no  appeal,  and  it  is  not  to  be  diguised  that  it  puts  the 
national  banking  system  in  imminet  jeopardy.  Nothing 
can  save  it  if  the  redemption  of  the  Government  bonds 
goes  on,  and  this  can  only  be  prevented  by  a  reduction 
of  the  Government  income  to  the  amount  required 
to  cover  its  ordinar}'  expenses,  of  which  reduction  there 
are  no  present  indications.  Now,  as  the  country  must 
be  supplied  with  a  paper  currency  of  some  kind,  the 
question  arises,  of  what  shall  this  currency  consist? 
Certainly  not  of  the  notes  of  State  banks,  because  if 
such  notes  could  be  perfectly  secured  their  credit  would 
be  local;  they  would  not  be  current  throughout  the 
Union.  But  they  could  not  be  perfectly  secured.  A 
large  part  of  the  States  have  no  bonds  outstanding  to 
base  circulating  notes  upon.  Many  that  have  are  in 
bad  credit.  None  have  maintained  absolutely  good 
faith  with  their  creditors,  except  Massachusetts  and 
California.  Besides,  State  credit  has  been  impaired  by 
the  late  decisions  of  the  Supreme  Court  in  the  Virginia 
and  Louisiana  cases  which  place  State  sovereignty 
upon  a  higher  plane  than  even  Mr.  Calhoun  ever  con- 
templated, and  enabled  the  State  to  violate  with  impu- 
nity any  and  all  contracts  which  they  have  entered  into 
with  their  creditors,  no  matter  how  carefully  prepared 
or  how  fair  and  just  may  have  been  their  provisions.  It 
is,  therefore,  quite  certain  that  if  and  when  the  notes  of 
the  national  banks  are  withdrawn  from  circulation  their 
place  will  be  filled,  not  with  the  notes  of  State  banks, 
but  with  United  States  legal-tender  notes.  I  say  legal 
tender,  because  this  quality  will  be  necessary  to  give 
them  currency,  and  because  the  power  of  Congress  to 
authorize  the  issue  of  such  notes  is  now  established. 
The  existing  legal-tender  notes  are  popular  with  the 
people — so  popular  that  if  the  notes  of  the  banks  should 
be  retired  there  would  be  an  irresistible  demand  for 
further,  if  not  unlimited,  issues.  The  average  voters 
will  not  be  likely  to  understand,  until  the  experiment 
has  been  tried  and  proved  to  be  disastrous,  why  their 
representatives  in  Congress  should  not  be  able  to  deter- 


361 

mine  how  much  currency  the  business  of  the  country 
requires.  If  they  should  fail  in  this  respect,  they  would 
be  promptly  enlightened  by  their  constituents,  to  whose 
demands  there  would  be  but  small  resistance.  What 
these  demands  are  likely  to  be  can  be  easily  foreseen. 
At  a  dinner  which  was  given  to  Bayard  Taylor,  just  be- 
fore his  departure  as  Minister  to  Berlin,  when  severe 
business  depressions  which  followed  the  financial  crisis 
of  1873  prevailed  throughout  the  country,  I  sat  beside 
one  of  the  most  respectable  and  intelligent  leaders  of 
the  Greenback  party,  and  I  was  amazed  when  he  as- 
serted that  "this  depression  was  caused  hy  contraction 
of  the  currency,  and  that  nothing  could  restore  former 
prosperity  except  an  emission  of  at  least  tzvo  thousand 
viillions  of  dollars  in  United  States  notes,''  which  were 
then  greatly  depreciated.  It  is  not  difficult  to  correctly 
predict  what  will  be  the  financial  condition  of  the  coun- 
try when  the  notes  of  the  national  banks  are  withdrawn 
from  circulation,  and  the  existing  restriction  upon  the 
issue  of  United  States  notes  is  removed.  There  will  be 
just  what  I  predicted  in  October,  1865,  another  "period 
of  hollow  and  seductive  prosperity,  to  be  followed  by 
widespread  disaster."  Other  nations  have  resorted  to 
the  issue  of  Government  notes  when  bankrupted  by  war 
or  extravagance.  History  informs  us  of  the  result. 
Whether  the  result  will  be  different  when  the  notes  are 
issued  by  a  Government  of  abounding  resources  and 
with  a  full  treasury,  will  be  ascertained  when  our  na- 
tional banking  system  shall  be  numbered  among  the 
things  that  have  been. 

There  is  another  question  of  present  and  more  press- 
ing interest  that  will,  doubtless,  receive  the  attention  of 
the  convention  at  the  present  session. 

THE   SILVER    QUESTION. 

Until  1879,  when  it  became  my  duty  to  give  the  sub- 
ject a  more  careful  examination  than  I  had  done,  I  was 
a  mono-metallist,  since  then  I  have  been  a  bi-metallist, 
and  I  have  by  observation  and  reflection  become  stronger 
and  stronger  in  my  new  faith.  Mr.  Hamilton  was  right 
when  he  said  in  his  masterly  report  in  1792: 


^62 


Upon  the  whole,  it  seems  to  me  most  desirable  not  to  attach 
the  unit  to  either  metal,  because  this  cannot  be  done  without 
effectually  destroying  the  character  of  one  of  them  as  money, 
and  so  reduce  it  to  the  character  of  mere  merchandise.  To  an- 
nul the  use  of  either  of  the  metals  as  money  is  to  abridge  the 
quantity  of  circulating  medium,  and  is  liable  to  all  the  objec- 
tions which  arise  from  the  comparison  of  the  benefits  of  a  full 
with  the  evils  of  a  scanty  circulation. 

The  world  is  not,  and  probably  never  will  be.  in  a 
condition  to  dispense  with  the  use  of  either  gold  orsilver 
as  a  standard  of  value  and  a  circulating  medium.  Both 
are  indispensable,  and  neither  can  be  reduced  in  com- 
parative value  by  artificial  means  below  the  other  with- 
out prejudice  to  local  and  international  trade,  nor  with- 
out increasing  the  burden  of  debts  by  decreasing  the 
amount  of  metallic  money  (which  is  the  only  real  mone}^ 
of  the  world)  in  circulation.  As  every  dollar  of  gold 
and  silver  in  existence  has  cost  in  labor  and  machiner}^ 
more  than  its  standard  value,  neither  can  be  depreciated 
except  by  artificial  means.  Silver  coin  is  now  depreci- 
ated in  comparison  with  gold,  not  by  natural  causes,  but 
b}^  the  action  of  European  nations.  A  few  years  ago 
gold,  by  the  large  productions  of  the  United  States  and 
Australia,  was  depreciated  in  comparative  value  with 
silver.  This  being  the  result  of  natural  causes,  the  dif- 
ference in  the  value  of  the  two  metals  was  of  short  du- 
ration. Natural  law  speedily  adjusted  the  difference  which 
natural  causes  had  produced.  The  existing  depreciation 
of  silver  is  not  the  result  of  the  large  production  of  the 
silver  mines,  but  of  the  action  of  German}^  in  demone- 
tizing it  and  the  restriction  of  its  coinage  by  the  I^atin 
nations.  Had  not  these  causes  been  at  work  the  depre- 
ciation of  silver,  which  is  now  disturbing  the  financial 
condition  of  the  world,  would  not  have  occurred.  The 
Congress  of  the  United  States  acted  wisel}^  in  monetiz- 
ing silver.  The  only  mistake  it  then  made  was  in  not 
adopting  the  French  standard. 

But,  while  Congress  acted  wisely  in  making  silver  a 
standard  with  gold,  it  has^acted  most  unwisely  in  con- 
tinuing the  coinage  of  it  in  the  face  of  the  action  of  Eu- 
ropean nations.  By  doing  so  it  is  making  the  United 
States  the  "pack  horse"  of  silver,  which  the  action  of 
these  nations  has  depreciated.     As  soon  as  it  zvas  dis- 


nm 


co7>ered  that  Eiu'opc  would  not  join  the  United  States  in 
their  effort  to  restore  silver  to  its  former  eoniparative  value 
with  gold  the  eoinage  of  silver  should  have  been  stopped, 
Vt\  continuing  to  act  independently  we  are  playing  into 
the  hands  of  rival  powers,  we  are  throwing  upon  our 
own  country  the  burden  of  maintaining  to  a  large  extent 
even  the  present  market  value  of  silver.  The  longer 
we  continue  the  free  coinage  of  silver  the  longer  will  it 
be  before  bi-metalism  is  adopted  b}^  other  commercial 
nations.  Although  the  United  States  are  the  largest 
silver-producing  country  in  the  world,  and,  therefore, 
have  a  deep  interest  in  its  value,  it  would  be  wiser  for 
us  to  demonetise  it  than  to  continue  to  coin  it.  I  am 
not  sure,  contradictory  as  it  may  seem,  that  the  most  ef- 
fective way  of  appreciating  silver  would  not  be  for  the 
United  States  to  demonetize  it.  We  are,  or  at  least  we 
have  the  means  of  being,  a  creditor  nation.  We  have 
less  silver  than  the  commercial  nations  on  the  other  side 
of  the  Atlantic,  and  are  better  able  than  they  to  stand 
the  loss  which  would  be  incurred  by  its  further  deprecia- 
tion. In  the  increased  scrabble  for  gold  which  would 
follow  such  action  on  our  part  we  should  not  be  the  chief 
sufferer. 

There  is  another  consideration  in  regard  to  continuing 
the  silver  coinage  of  pressing  interest,  if  not  of  vital  im- 
portance. By  continuing  to  coin  it  we  are  not  increasing 
to  any  considerable  extent  the  amount  of  metallic  mone)^ 
in  circulation.  We  are  filling  the  Treasur}^  with  dollars 
for  which  there  is  no  demand.  Instead  of  increasing 
the  circulating  medium,  we  are  doing  what  must  event- 
ually produce  severe  contraetion.  Unless  our  polic}'  is 
changed  the  Government  will,  ere  long,  be  compelled 
to  pay  a  part,  if  not  the  whole,  of  the  interest  on  its 
bonds  and  of  the  principal  at  maturit}^  in  silver  dollars. 
When  this  point  is  reached  gold  will  no  longer  be  a  cir- 
culating medium  in  the  United  States.  It  will  be  virtu- 
alh^  demonetized,  and  become  an  article  of  merchandise. 
It  will  be  locked  up  b}^  the  banks,  hoarded  by  the  people, 
or  sent  abroad.  This  will  be  contraction  of  the  severest 
and  worst  possible  nature,  the  effects  of  which  upon  the 
national  credit  and  upon  all  our  manifold  enterprises 
will  be  to  the  last  degree  damaging. 


364 


What,  then,  can  be  done  by  the  members  of  the  corl- 
vention  to  prevent  the  evils  which  threaten  the  country  ? 
Seeing  clearl}^,  as  the}^  do,  the  dangers  ahead,  the}^  can 
at  least  do  this:  they  can  sound  the  alarm.  I  recollect 
that  upon  our  Western  rivers,  when  a  steamboat  was 
about  to  run  upon  a  dangerous  shoal,  the  cry  went  out 
from  the  pilot  to  the  engineer:  "  Give  her  a  lick  back!'' 
So,  now,  from  bankers  and  all  men  who  are  not  blind  or 
reckless,  the  cry  to  the  managers  of  our  financial  ship 
should  ring  out  sharp  and  clear:  "  GivK  her  a  i,ick 
back!  give  her  a  lick  back!  " 


LETTER 

TO    THE 

^EW   YORK    TIMES,  OCTOBER  19,  1889, 


LETTBR 

TO    THE 

NEW   YORK   TIMES,  OCTOBER  19,  1889. 


Permit  me,  Mr.  Editor,  in  reply  to  questions  that  fre- 
quently come  to  me,  to  say  in  your  columns  a  few  words 
at)out  the  two  great  parties,  which  ever  since  the  forma- 
tion of  the  Government  have  been  contending  for  supre- 
macy, and  something  more  (trite  as  it  may  be  regarded) 
upon  the  subject  which  more  than  anything  else  now 
divides  them. 

Ralph  Waldo  Emerson  remarked  some  years  ago  that 
"the  Whigs  had  the  best  men,  the  Democrats  the  best 
principles."  Since  then  changes  have  taken  place  in 
both  parties  upon  financial  and  economic  questions. 
Then  the  Democrats  were  in  favor  of  gold  and  silver 
(hard  money)  and  specie-paying  bank-notes  as  a  cur- 
rency, while  some  of  the  most  ultra  were  opposed  to 
paper  money  of  all  kinds.  They  also  were  the  advocates 
of  a  tariff  for  revenue  only.  Now  a  large  majority  of  its 
members  are  in  favor  of  direct  issues  by  the  Government 
of  greenbacks,  as  they  are  called,  whether  convertible 
or  not,  and  some  of  its  leading  men  (a  few  only,  to  their 
credit  be  it  said,)  are  the  advocates  of  a  protective  tariff. 

Then  the  Whigs  favored  a  bank-note  currency,  the 
value  of  wdiich  depended  upon  its  relations  to  specie, 
and  which  was  not  to  be  tolerated  when  it  ceased  to  be 
convertible.  Now  their  descendants,  the  Republicans, 
unite  with  Democrats  in  favoring  Government  notes, 
and  have  become  converts  to  the  doctrine  which  Mr, 
Webster  pronounced  a  "dangerous  if  not  fatal  delusion," 
that  the  Government,  in  the  exercise  of  its  legitimate 
discretion,  cannot  only  issue  its  notes  for  a  circulating 
medium,  but  can  make  them  lawful  money   and  a  legal 


368 


tender— a  doctrine  which,  to  the  utter  amazement  of 
most  of  the  best  legal  minds  of  the  country,  has  been 
sustained  by  the  Supreme  Court. 

Then  the  Whigs  supported  a  tariff  for  revenue,  with 
incidental  protection.  Now  the  Republicans  are  the 
supporters  of  a  tariff  of  which  protection  is  the  object 
and  revenue  the  incident.  There  were,  of  course,  other 
subjects  of  public  interest -before  the  country  upon  which 
the  parties  were  more  or  less  divided,  but  currency  and 
taxation  were  by  far  the  most  interesting,  except  the 
question  of  State  rights,  which  was  put  to  rest  upon  the 
battle-field.  During  the  civil  war  the  Republican  party 
received  large  accessions  from  the  Democrats.  Since 
the  war  the  Democratic  party  has  been  able  to  number 
in  its  ranks  a  good  mau}^  recent  Republicans.  The  two 
parties  are  now,  as  the}^  have  been  for  most  of  the  time 
since  the  Government  was  established,  nearly  equal  in 
numerical  strength,  and  neither  in  its  full  membership 
is  quite  sound  according  to  its  old  standards. 

The  Democratic  party,  however  it  may  have  changed 
in  principles,  has  clung  tenaciously  to  its  time-honored 
ijame.  Its  great  opponent  has  not  been  so  fortunate. 
At  the  start  it  was  the  Federal  party,  then  (some  of  its 
unpopular  Federal  doctrines  having  been  discarded)  it 
became  the  Whig  party,  and  then  the  Republican  part}', 
under  which  name  it  won  its  highest  renown  by  the 
hearty  and  united  support  which  it  gave  to  the  Govern- 
ment in  its  desperate  struggle  for  the  maintenance  of  its 
existence.  For  a  brief  intermediate  period  it  was  known 
as  the  National  Republican  party. 

Most  of  the  questions  other  than  those  that  have 
been  named,  upon  which  the  parties  have  heretofore 
been  divided,  have  either  become  obsolete  or  have  been 
consigned  to  the  background.  The  question  upon  which 
the  party  lines  are  now  most  strictly  drawn,  and  upon 
which  the  parties  have  never  been  in  accord,  is  the 
tariff.  Both  are  in  favor  of  a  tariff,  but  there  are  ver}^ 
important  differences  between  them  in  regard  to  its 
character.  There  are  men  in  botJi  parties  zv  ho  favor  free 
trade,  but  tJiere  is  no  free-trade  party  in  the  United  States, 
nor  will  there  be  for  years  to  come,  if  ever.  The  journals 
(and  strangely  enough  some  of  them  claim  to  be  Demo- 


8()0 

cratic)  in  which  tariif  reform  is  spoken  of  and  denounced 
as  free  trade  are  under  the  influence  of  the  protected 
interests. 

Both  parties  believe  that  the  Government  must,  as  has 
always  been  the  case,  be  mainly  supported  by  duties 
upon  imports,  but  beyond  this  they  are  at  variance. 
The  Republican  party,  according  to  its  generally  ap- 
proved platform,  believes  that  duties  should  be  imposed 
not  only  for  revenue,  but  also,  and  mainly,  to  protect 
home  manufacturers  from  foreign  competition.  The 
Democratic  party,  according  to  its  platform,  from  which 
there  are  few  dissenters,  believe  that  duties  should  be 
imposed  for  revenue,  not  for  protection;  that  Congress, 
under  the  Constitution,  has  no  authority  to  impose  duties 
to  protect  manufacturers  in  the  United  States  against 
the  manufacturers  of  other  nations;  but  while  it  be- 
lieves that  duties  should  be  imposed  for  revenue  and 
not  for  protection,  it  believes  also  that  duties  should  be 
imposed  mainly  upon  luxuries  and  upon  such  goods  as 
are  manufactured  in  the  United  States,  so  that  home 
manufacturers  may  have  the  incidental  advantage  re- 
sulting therefrom  in  their  competition  with  foreigners. 
On  this  point  it  now  stands  where  the  Whig  party  stood 
when  Henry  Clay  was  its  leader. 

The  question,  therefore,  immediately  and  prominently 
before  the  country  is:  Shall  duties  be  imposed  mainly 
for  protection  or  mainly  for  revenue — for  protection  as 
the  object  and  revenue  the  incident,  or  for  revenue  as 
the  object  and  protection  the  incident? 

There  is  another  question  which  ought  to  receive 
and  which,  if  our  republican  institutions  are  to  be  per- 
manent, must  soon  receive  the  earnest  attention  of  the 
people,  to  wit:  Shall  the  offscouring  of  European  na- 
tions continue  to  be  invited  to  come  and  help  govern 
the  great  republic  ?  This  question  is  the  question  of 
surpassing  interest;  but,  as  it  is  not  a  question  of  dol- 
lars, it  will  not  receive  the  attention  which  it  deserves 
and  demands  until  the  tariff,  the  old  apple  of  discord,  is 
disposed  of. 

There  is  another  question  which  I  hope  will  not  come 
to  the  front— the  authority  and  duty  of  Congress  to  reg- 
ulate Federal  elections  in  the  Southern  States.     I  hope 


370 

that  this  question  will  not  be  presented  for  the  action  of 
Congress  at  the  next  session  or  an}^  other.  If  it  should 
be,  it  would  revive  sectional  animosities,  increase  race 
prejudices,  and  become  a  party  question  of  far-reaching 
consequences.  Some  of  the  advocates  of  intervention 
by  the  Government  in  Southern  elections  might  be  in- 
fluenced by  patriotic  motives,  but  by  the  larger  number 
and  more  active  advocates  it  would  be  regarded  as  the 
means  of  bringing  out  and  consolidating  the  colored 
voters,  and  giving  to  them  the  control  in  all  Federal 
elections;  indifferent  if  not  more  than  indifferent  to  the 
fact  that  it  would  be  quite  impossible  to  give  to  them 
the  control  in  Presidential  and  Congressional  elections 
without  giving  to  them  the  control  in  State  elections 
also. 

If  the  colored  voters  should  be  united,  and  they  should 
vote  as  freely  as  the  whites,  three  of  the  Southern  States 
would  be  controlled  by  them.  The  white  people  of  the 
country,  and  the  whole  country  without  respect  to  party, 
are  not  ready  to  see  any  of  the  States  under  the  domi- 
nation of  a  race  which,  for  want  of  intelligence  and  dis- 
cipline, if  for  nothing  else,  is  totally  unfitted  for  the  ex- 
ercise of  governing  power.  They  have  not  forgotten 
what  occurred  in  South  Carolina  when,  in  the  process 
of  reconstruction,  it  was  dominated  by  negroes.  The 
franchise  is  a  very  different  question  for  even  States  to 
deal  with,  and  it  is  likely  to  be  as  troublesome  in  some 
of  the  Northern  States  as  in  the  Southern.  What  is 
called  the  foreign  vote  is  even  now  as  threatening  to 
the  welfare  St.  Louis,  Cincinnati,  and  Chicago  as  the 
negro  vote  may  become  to  the  welfare  of  Louisiana, 
Mississippi,  and  South  Carolina.  The  Canadian  French, 
whose  votes  are  for  sale  to  the  highest  bidder,  are  a 
dangerous  element  in  New  Hampshire,  and  foreigners 
of  all  descriptions  are  a  dangerous  element  not  only  in 
the  cities  I  have  named,  but  in  all  large  manufacturing 
districts. 

It  is  perhaps  fortunate  that  laws  which  could  be  passed 
by  Congress  for  the  regulation  or  supervision  of  elections 
must  be  general,  and  applicable  to  all  States  alike. 
Men  at  the  North,  who  might  favor  Congressional  inter- 
vention at  the  Southj  would  be  little  disposed  to  favor  it 


371 

in  their  own  vStates.  Congress  cannot  practically  deal 
with  the  franchise  qnestion  without  being  subjected  to 
unhealthy  influences.  It  is  a  question  which  should  be 
left  to  the  States.  Its  phases  are  different  in  the  differ- 
ent vStates,  and  each  State  should  be  at  liberty,  as  here- 
tofore, to  manage  it  without  Congressional  interference, 
which  would  aggravate  the  danger  to  which  our  repub- 
lican institutions  are  exposed  by  w^hat  has  become  prac- 
tically unlimited  suffrage.  If  the  question  is  left  where 
it  belongs  it  will  not  be  many  years  before  the  colored 
men  in  all  the  Southern  States  will  vote  as  freely  as  they 
do  now  in  Virginia,  and  both  of  the  great  parties  will  be 
soliciting  their  divided  votes. 

What  has  been  said  in  regard  to  the  incompetency  of 
the  colored  people  for  the  government  of  States  is  equally 
true  in  regard  to  foreigners.  Among  the  former  are 
many  intelligent  and  competent  voters,  and  the  same  is 
true  of  the  latter,  but  an  overwhelming  majority  of  both 
is  not  onh'  unfit  for  the  proper  exercise  of  governing 
power,  but  for  the  intelligent  and  independent  use  of 
the  ballot.  The  influences  which  prevent  a  full  vote  at 
the  South  are  certainly  no  more  unjustifiable  than  is 
vote  buying  at  the  North.  Each  State  will  have  enough 
to  do  in  the  proper  management  of  its  own  elections, 
without  attempting  through  its  representatives  in  Con- 
gress to  regulate  the  elections  in  other  States.  One 
thing  is  certain,  in  no  State  will  life  and  property  be 
in  danger,  because  there  are  not  voters  enough.  //  is 
ludiiiiited  suffrage,  the  exeixise  of  the  Jiighest  of  all  political 
privileges,  by  those  who  have  no  interests  at  stake,  that 
threatens  the  well-being,  if  not  the  life,  of  the  republie. 

PROTECTION    NO    IvONGER    NEEDED. 

But  to  return  to  the  tariff,  upon  which  party  lines  are 
drawn  with  more  distinctness  than  ever  before.  Upon 
this  question  my  opinion  is  what  it  has  always  been  since 
my  attention  was  first  directed  to  it.  Admitting  what  I 
am  not  disposed  to  deny,  that  protective  duties  were 
once  needed  to  induce  capitalists  to  put  their  money  into 
manufactories,  it  is  very  clear  to  my  mind  that,  as  this 
object  h^s  been  long  since  accomplished,  the  continuance 


372 


of  such  duties  is  not  only  unjust  to  the  great  body  of 
consumers,  but  prejudicial  to  the  best  interests  of  the 
country.  The  present  tariff  is  substantially  the  same 
that  was  adopted  soon  after  the  commencement  of  the 
civil  war.  The  Government  was  then  engaged  in  a  life 
or  death  struggle  for  the  maintenance  of  its  unity,  and 
large  revenues  were  required,  not  only  for  current  use, 
but  to  strengthen  the  national  credit  for  borrowing  pur- 
poses, and  so  large  was  the  demand  of  the  Government 
for  goods  of  various  descriptions  that  there  were  very 
large  importations,  notwithstanding  the  high  duties  to 
which  they  were  subjected. 

When  the  war  was  ended  and  the  Government  ceased 
to  be  a  large  bu3^er,  the  tariff,  which  was  a  war  measure, 
should  have  been  carefully  revised,  in  order  that  it  might 
be  accommodated  to  the  changed  condition  of  the  country. 
This  was  not  and  has  not  been  done.  Some  changes 
have  been  made.  Some  articles  have  been  put  upon  the 
free  list,  and  upon  others  the  duties  have  been  reduced, 
but  it  is  substantially  the  same  tariff  that  was  created  in 
1862 — a  tariff  designed  for  revenue,  but  highly  protec- 
tive, and  of  some  articles  prohibitory.  In  examining  the 
bill,  the  leading  features  of  which  have  been  carefully 
preserved,  one  cannot  fail  to  perceive  that  in  its  adoption 
Congress  must  have  been  greatly  misled.  Let  us  look 
at  some  of  the  articles  on  which  duties  were  imposed, 
and  to  which  I  referred  in  one  of  my  Cambridge  lectures: 

Salt — Is  used  by  every  family  in  the  United  States, 
and  immense  quantities  are  used  in  curing  meats  and 
fish.  It  is  produced  largely  in  many  States,  and  the 
production  could  be  increased  to  an  almost  unlimited  ex- 
tent. The  duty  on  salt  was,  and  I  think  still  is,  39^ 
per  cent,  when  imported  in  bags,  and  69  per  cent,  when 
imported  in  bulk.  Very  little,  of  course,  is  imported, 
and  everyone  in  this  broad  country  who  uses  salt  is 
taxed,  not  for  the  benefit  of  the  public  revenue,  but  for 
the  enrichment  of  a  few  manufacturers  or  owmers  of  salt 
mines. 

Blankets — Valued  at  over  40  cents  a  pound  up  to 
80  cents  were  subject  to  a  specific  duty  of  20  cents  a 
pound  and  35  per  cent,  ad  valorem.  Such  blankets  as 
are  used  by  millions  of  people  in  the  United  States  cost 


3^3 


in  England  about  >i.75  a  pair,  the  duties  on  which 
are  nearly  $1.50.  Can  such  a  dut}^  be  rightfully  con- 
tinued ? 

Steel  Rails. — The  duty  on  steel  rails,  which  was  $25 
per  ton,  has  been  reduced;  but  no  revenue  is  derived 
from  them,  as  they  can  be  made  as  cheaply  in  the  United 
States  as  in  Europe. 

Scores  of  articles  might  be  mentioned  to  show  how 
preposterous  the  tariff  was  and  is,  in  some  respects,  with 
regard  to  revenue,  and  how  unjust  to  the  great  body  of 
tax-payers,  but  I  will  only  mention  one  more. 

Copper. — The  duty  on  copper  was,  and  I  suppose  still 
is  (I  have  no  copy  of  the  Tariff  at  hand),  five  cents  a 
pound,  which  is  prohibitory.  None  is  imported,  but 
considerable  quantities  are  exported.  Here  is  an  article 
which  is  taxed  so  heavily  that  none  can  be  imported, 
and  the  excess  of  production  over  the  very  large  home 
demand  is  sent  to  foreign  markets.  The  duty  on  copper 
has  enriched  the  owners  of  copper  mines,  but  it  has 
3nelded  no  revenue  to  the  Government.  Its  continuance 
is  without  a  shadow  of  justification,  as  it  adds  largely  to 
the  cost  of  an  article  in  general  use,  and  nobody  is  bene- 
fited by  it,  except  the  favored  few  in  whose  interest  it 
was  imposed. 

THE   DEFENSE  OF   THE  TARIFF. 

Ever^'one  must  admit  that  in  respect  to  such  articles 
as  have  been  named  the  tariff  should  be  amended,  but 
its  supporters  contend  that  in  its  general  scope  it  is 
right,  and  it  is  defended  on  such  grounds  as  the  follow- 
ing: 

First.  That  it  has  stimulated  production,  induced  the 
construction  of  iron  mills  and  cotton  and  woolen  fac- 
tories, put  in  motion  machiner}^  of  all  descriptions,  and 
has  thus  added  largely  to  the  national  wealth. 

Second.  That  it  has  advanced  wages  and  greatly  im- 
proved the  condition  of  the  laboring  classes. 

Third.  That  l)y  stimulating  production  it  has  created 
home  competition,  as  the  result  of  which  the  goods 
wdiich  are  most  generally  and  extensively  in  use  have 
been  cheapened,  to  the  manifest  advantage  of  the  users. 


m 


Are  these  claims  in  behalf  of  our  protective  tariff  well 
founded?     Let  us  see: 

First.  It  is  admitted  that  the  tariff  has  stimulated  pro- 
duction, the  evidence  of  which  is  seen  in  the  mills  and 
factories  and  machine  shops  which  have  been  constructed 
all  over  the  country  within  the  last  twenty  years.  But 
what  are  the  offsets  ?  By  stimulating  production  it  has 
increased  manufacturing  power  be3^ond  the  needs  of  the 
country.  There  are  few  mills  or  factories  in  any  branch 
of  manufacturing  that  are  worked  to  their  full  capacity. 
On  the  contrary,  it  is  estimated  that  if  all  of  them  .should 
be  actively  employed  for  six  months  the}"  would  be  able 
to  supply  all  demands  for  a  year.  //  is  ucni)  well  under- 
stood that  the  mamifacturing  power  of  tJie  country  has  been 
so  increased  by  the  tariff  stimulus  that  combinations — trusts, 
as  they  are  called— have  been  resorted  to  from  necessity  to 
limit  its  exercise,  so  that  the  supply  may  not  exceed  the  de- 
mand. This  expedient  cannot  be  long  continued,  and 
nothing  can  prevent  serious  trouble  with  manufacturers 
and  their  employees  but  wider  markets  for  their  produc- 
tions, and  one  fails  to  see  how  these  can  be  obtained 
without  radical  changes  in  our  protective  and  restrictive 
policy. 

That  the  wealth  of  the  country  has  been  very  largely 
increased  by  our  manufactures  is  obvious.  It  would  be 
impossible  for  immense  quantities  of  raw  materials  to  be 
converted  b}'  labor  and  machiner}*  into  finished  goods 
-without  large  accessions  to  the  national  wealth.  Manu- 
facturing has  made  some  people  wealth}-,  and  their 
wealth  is  a  part  of  the  national  wealth;  but  it  has  not 
been  widely  diffused;  it  has  been  confined  to  the  favored 
fev/. 

The  country  has  been  enriched  by  its  manufactures, 
but  its  much  greater  gains  have  been  the  result  of  the 
conversion  of  wild  lands  into  productive  farms.  It  is  by 
agriculture  mainly  that  the  nation  has  been  enriched, 
and  the  wealth  thus  gained  has  not  been  at  the  expense 
of  other  interests.  On  the  contrary,  it  has  been  widely 
difi'used;  all  other  interCvSts  have  been  very  largely  de- 
pendent upon  it;  and  yet  this  great  interest  has  received 
no  favors  from  Congress,  nor  has  it  had  in  that  body  any 
especial  representatives.     I  ought  in  saying  that  agricul- 


B75 

ture  had  received  no  favors  from  Congress  to  except 
wool  growing.  The  dut}'  on  wool  is  continued  to  satisfy 
the  demands  of  the  wool  producers  of  the  West,  and  if 
the  protective  policy  is  wise  these  demands  are  reason- 
able. This  duty,  however,  stands  right  in  the  way  of 
the  woolen  manufacturers  of  the  East,  who  cannot  make 
certain  classes  of  goods  that  are  in  demand  without  foreign 
wool.  Here  we  have,  on  the  one  hand,  a  demand  for  a 
tax  upon  wool  on  the  ground  that  sheep  raising  cannot 
be  carried  on  successfully  without  it.  On  the  other  hand, 
we  have  the  woolen  manufacturers  complaining  of  the 
duty  on  the  ground  that  their  business  is  imperiled  by 
it.  This  antagonism  is  one  of  the  many  illustrations  of 
the  impolicy  of  the  protective  tariff. 

Second.  It  is  contended  that  the  tariff  has  advanced 
wages  and  been  a  boon  to  the  laboring  classes.  From 
the  tone  of  our  protection  journals  one  would  suppose 
that  it  is  the  welfare  of  the  laborers  in  which  protection- 
ists are  chiefly  interested.  Wages  are  higher  in  the 
United  States  than  in  Europe,  but  they  are  lower  now 
than  they  have  been,  and  unless  immigration  is  checked 
they  will  soon  go  down  to  about  the  average  European 
standard.  Were  it  not  that  the  consequences  of  con- 
tinued immigration  are  likely  to  be  serious,  it  would  be 
a  matter  of  ridicule  that  manufacturers  who  advocate 
protection  for  the  reason  that  labor  is  higher  in  this 
country  than  it  is  in  Europe  hail  with  pleasure,  if  they 
do  not  directly  aid,  immigration,  as  the  means  of  re- 
ducing the  cost  of  it.  Wages,  as  has  been  said,  are 
higher  in  the  United  States  than  they  are  in  Europe, 
but  so  are  clothing  and  many  other  articles  which  families 
of  laborers  need.  I  doubt  very  much  that  the  laborers 
in  United  States  factories  are  better  off  at  the  end  of  the 
year  than  laborers  in  British  factories,  yls  long  as  there 
is  free  trade  in  labor,  as  long  as  onr  ports  are  open  to  all 
comers,  there  will  be,  all  things  considered,  little  difference 
in  the  price  of  labor  between  this  country  and  other  coiintiies. 

Third.  It  is  contended  that  the  tariff,  by  stimulat- 
ing production,  has  created  home  competition,  b}^ 
which  goods  in  common  use  have  been  greatly  cheap- 
ened, to  the  manifest  benefit  of  the  users.  It  is  true 
that  such  goods  are  much  lower  in  price  than  they  form- 


376 


erly  were,  but  not  b}^  reason  of  home  competition.  They 
are  lower  because  by  the  great  improvements  in  ma- 
chiner}^  they  can  be  made  cheaper.  The  tariff  is  en- 
titled to  no  credit  on  this  score;  on  the  contrary,  by 
preventing  foreign  manufacturers  from  competing  with 
our  home  manufacturers,  it  gives  to  the  latter  the  con- 
trol of  the  home  markets.  It  not  only  prevents  free  ex- 
changes between  the  United  States  and  foreign  nations; 
it  enables  home  manufacturers,  b}'  combinations,  to  pre- 
vent free  trade  at  home. 

OBJECTIONS   TO    A    PROTECTIVE   TARIFF. 

In  every  view  which  I  can  take  of  it  our  protective 
tariff  is  open  to  insurmountable  objections,  some  of 
which  I  will  refer  to: 

First.  It  is  class  legislation,  for  which  there  is  no  war- 
rant in  the  Constitution.  To  protect  manufacturers  in 
the  United  States  against  foreign  competition  is  not 
among  the  powers  conferred  upon  Congress.  If  what  is 
done  indirectly  should  be  attempted  directly,  what 
would  be  the  result  ?  If,  for  instance,  a  bill  should  be 
introduced  in  the  House  to  protect  the  manufacturers 
of  any  useful  article  in  the  United  States  against  foreign 
competition,  how  many  members  would  vote  for  it  ?  If 
such  a  bill  should  become  a  law,  what  chance  would  it 
stand  of  being  sustained  by  the  Supreme  Court,  liberal 
as  that  court  is  in  its  views  of  Congressional  power  ? 
Now,  if  Congress  cannot  directh^  prohibit  the  importa- 
tion of  foreign  goods,  in  order  to  enable  United  States 
manufacturers  to  control  the  home  markets  for  such 
goods,  what  justification  is  there  for  the  accomplish- 
ment of  the  same  object  by  legislation  nominally  for 
revenue  ? 

Second.  It  is  no  longer  needed  for  the  purpose  for 
which  the  protective  policy  was  originally  designed.  It 
is  certainly  not  needed  to  induce  capitalists  to  invest 
their  money  in  manufacturing,  for,  as  has  been  said,  too 
much  money  has  already  gone  in  this  direction.  Nor  is 
it  needed  to  protect  home  interests  against  foreign  im- 
portation, for  all  of  the  articles  most  generally  in  use 
can  be  made  as  cheaply  in  the  United  States  as  in  Great 


377 

Britain— the  country  which  takes  the  lead  in  nearly  all 
branches  of  the  most  useful  manufacturing.  Let  us  look 
a  little  more  closely  at  some  of  the  articles  which  I  have 
named. 

Iron  and  coal  in  Great  Btitain  are  widely  separated 
and  are  obtained  thousands  of  feet  below  the  surface. 
In  a  number  of  the  States  the  same  articles  of  equally 
good  quality  and  of  inexhaustible  supply  are  found  side 
by  side  and  close  to  the  surface,  almost  cropping  out  of 
it"!  Does  anyone  believe  that  iron  and  steel  cannot  be 
made  as  chea'ply  in  Pittsburg  and  Cleveland  and  North- 
ern Alabama  as  in  Great  Britain?  For  certain  uses  for- 
eign iron  ore  is  needed  by  both  countries.  Great  Britain 
lets  it  come  to  her  free  from  duty.  Our  Government 
either  prohibits  its  importation  or  subjects  it  to  so  high 
duties  that  it  cannot  be  profitably  imported. 

Some  of  the  iron  mills  in  Massachusetts  are  now  se- 
verely suffering  by  the  high  duties  on  the  foreign  iron 
and  ores  which  are  needed  in  especial  work.  There  is 
to-day  the  same  antagonism  of  interests  between  the 
iron  mill  owners  of  Massachusetts  and  the'  iron  mill 
owners  of  Pennsylvania  that  there  is  between  the  woolen 
mill  owners  of  New  England  and  the  sheep  raisers  of 
Ohio.  The  woolen  manufacturers  need  a  reduction  of 
dutv  on  certain  classes  of  wool— the  wool  producers  are 
opposed  to  such  a  reduction.  The  iron  mill  owners  of 
New  England  are  urgent,  not  only  for  a  reduction  of 
duties  upon  certain  kinds  of  iron,  but  upon  coal  also; 
Pennsylvania  is  decidedly  against  both.  How  can  these 
antagonisms  be  healed  ? 

Cotton  produced  in  the  United  States  is  bought  by 
British  manufacturers  and  made  up  by  them  into  fabrics 
of  various  kinds  for  sale  in  all  markets  from  which  they 
are  not  excluded.  Cotton  cloths  are  made  chiefly  by 
machinery,  in  the  invention  and  use  of  which  Americans 
are  unsurpassed — unequaled,  it  might  be  said — by  any 
other  people.  Can  the  British  manufacturer  pay  the 
freight  both  ways  and  be  a  dangerous  competitor  m 
cotton  goods  of  our  own  manufacturers  in  our  own 
markets  ? 

Wool  is  largely  produced  in  the  United  _  States.  The 
foreign  wool  that  is  needed   can  be  obtained  in  South 


378 

America  and  Spain,  the  countries  from  which  great 
Britain  obtains  her  chief  supplies.  In  its  manufacture,  as 
is  the  case  with  cotton,  machinery  comes  into  full  play; 
very  little  is  done  by  hand.  The  only  ground  on  which 
the  manufacturers  of  woolen  goods  in  the  United  States 
can  rightfully  claim  Governmental  protection  is  that  the 
foreign  wool — the  raw  material  which  is  needed  for  cer- 
tain classes  of  goods — is  subject  to  high  duties.  \Yith 
free  wool  or  low  duties  thej^  should  not  fear  competition 
from  any  quarter. 

There  are  many  other  articles  in  regard  to  which  the 
same  remarks  would  be  true;  indeed,  it  may  be  truth- 
fully said  that  there  are  no  goods  in  the  manufacture  of 
which  machinery  is  largely  used  which  cannot  be  now 
made  at  as  little  cost  in  the  United  States  as  in  any  other 
country,  and  it  will  be  borne  in  mind  that  in  our  home 
markets  our  own  manufacturers  will  always  have  the  ad- 
vantage over  foreign  competitors  which  a  tariff  for  reve- 
nue will  secure  to  them.  As  an  illustration  of  what  I 
have  said  about  the  abilit}^  of  our  manufacturers  to  com- 
pete with  foreigners,  I  will  refer  to  a  single  article: 

The  duty  on  quinine  was  20  per  cent.,  and  as  the  ma- 
terial of  which  it  was  made  was  exempt  from  duty,  it 
could  be  made  as  cheaply  in  the  United  States  as  anj^- 
where  else.  The  duty,  therefore,  although  not  very 
high,  was  virtually  prohibitory,  and  a  single  strong  and 
admirably-managed  firm  in  Philadelphia  had  for  many 
years  the  monopoly  of  an  immense  traffic  in  an  article 
of  almost  universal  use.  When  the  duty  was  taken  off, 
in  compliance  with  an  irresistible  popular  demand,  it 
was  predicted  that  the  manufacturers  in  the  United  States 
w^ouid  be  compelled  to  give  wa}^  to  foreigners.  The  pre- 
diction has  not  been  verified.  The  same  great  firm, 
Messrs.  Powers  &  Weightman,  are  still  carrying  on  the 
business,  and  are  making  and  selling  nearly  all  the  qui- 
nine that  is  used  in  the  United  States.  The  material  of 
which  it  is  made  is  more  plentiful,  and  consequently 
much  cheaper,  than  it  formerly  was,  but  the  exemption 
from  duty  has  had  a  good  deal  to  do  with  the  reduction 
of  the  price  of  quinine  from  $5  an  ounce  to  eighty 
cents. 


879 


SHUTTING    THK    WORI^D  S    MARKETS. 

Third.  Our  protective  tariff  is  not  only  class  legisla- 
tion, and  no  longer  needed  for  legislative  purposes,  it  is 
gradually  shutting  up  the  markets  of  the  world  against 
our  agricultural  productions.  The  great  interest  that 
underlies  all  other  interests  has  not  only  (with  a  single 
exception,  wool,)  received  no  favors  from  the  Govern- 
ment, but  it  has  been  directly  and  greatly  prejudiced  by 
exclusive  legislation  in  favor  of  manufacturers.  The  pro- 
tective policy  has  had  what  might  be  called  "full  swing" 
for  a  quarter  of  a  century,  and  yet  while  the  country  has 
been  growing  with  wonderful  rapidity  in  wealth  and  pop- 
ulation, there  are  few  farm  productions  that  are  selling 
for  enough  to  cover  their  cost.  For  farming  lands  in  the 
Eastern  States  there  are  no  purchasers.  In  the  Middle 
States  they  are  not  w^orth  more  than  they  readily  com- 
manded twenty  years  ago,  and  in  the  West,  in  such  grand 
States  as  Iowa,  Kansas,  and  Nebraska,  farm  mortgages 
are  increasing  with  fearful  rapidit3\  Were  it  not  for  the 
cotton  and  wheat  and  flour  and  corn  and  provisions  which 
Pairope  (chiefly  Great  Britain)  takes  of  us,  our  farming 
interests  would  be  practically  paralyzed. 
•  Farmers  have  been  so  drilled  in  the  idea  that  it  is  the 
home  market  upon  which  they  should  rely  that  they  seem 
to  have  been  unconscious  of  the  fact  that  the  home  mar- 
ket is  altogether  insufficient  for  the  supply,  which  is  in- 
creasing more  rapidly  than  the  home  market  demands, 
and  that  either  increase  of  demand  or  diminution  of  sup- 
ply has  become  a  necessity.  Western  farmers  are  com- 
plaining of  the  low  prices  of  what  they  have  to  sell,  and 
many  of  them  attribute  the  depression  to  a  scarcity  of 
currency.  If  they  would  cease  looking  to  protectionists 
for  information  and  would  examine  the  trade  relations 
between  their  own  country  and  other  countries  the}^ 
would  discover  that  it  is  markets,  not  currency,  that  is 
needed  for  the  improvement  of  their  conditions.  The 
tariff  has  contributed  immensely  to  the  gains  of  manu- 
facturers, while  for  some  time  past  the  farmers  who  have 
been  as  well  off  at  the  close  of  the  3'ear  as  the}^  were  at 
the  commencement  have  been  the  exceptions. 

Nothing  is  clearer  than  the  fact  that  the  tariff  is  hostile 


B80 


to  our  great  farming  interest,  and  for  the  simple  reason 
that  it  diminishes  the  demand,  or  stands  in  the  wa}'  of 
an  increase  of  demand,  for  our  agricultural  staples. 

The  trade  of  the  Central  and  South  American  States 
is  with  Europe — chiefly  with  Great  Britain — not  with 
the  United  States,  and  only  because  we  have  put  a  pro- 
tective, if  not  prohibitory,  tax  upon  many  of  their  im- 
portant productions.  The}^  are  our  neighbors  and  friends, 
and  they  would  be  glad  to  have  good  trade  relations,  as 
well  as  close  political  relations,  with  us.  This  they  can- 
not have  until  our  tariff  is  carefully  revised  and  modi- 
fied. We  shall  doubtless  hear  from  their  representa- 
tives, at  the  convention  which  is  soon  to  be  held  in 
Washington,  what  they  think  about  our  tariff. 

//  is  not  too  much  to  say  that  zvc  have  no  proper  andmu- 
tnally  profitable  trade  relations  with  these  countries.  We 
take  from  them  free  from  duty  such  articles  as  we  do  not 
produce  and  are  in  need  of;  they  take  from  us  what  they 
can  buy  cheaper  of  us  than  they  can  buy  of  other  na- 
tions. We  take  from  them  free  from  duty  coffee,  india 
rubber,  Peruvian  bark,  and  dye  stuffs.  We  take,  also, 
free  from  duty,  hides,  because  the  home  supply  is  not 
equal  to  our  wants,  but  we  put  a  protective,  or  rather 
prohibitory,  duty  upon  wool,  copper,  sugar,  and  other 
articles  which  we  produce  as  well  as  they  do.  They  take 
of  us  flour,  some  kinds  of  lumber,  and  manufactures, 
but  for  three-quarters  of  what  we  bu}^  them  we  pay  in 
drafts  on  England  (stewing  exchange).  There  is  noth- 
ing like  free  exchanges  between  the  United  States  and 
the  other  States  on  this  side  of  the  Atlantic.  If  the 
tariff  had  been  designed  to  restrict  reciprocity  with  them 
it  could  hardly  have  been  more  effective.  Great  Britain, 
wiser  than  the  United  States,  takes  from  them  what 
they  have  to  sell  and  pays  for  it  in  her  own  manufac- 
tured goods  to  their  mutual  advantage.  Their  markets 
ought  to  be  open  to  the  productions  of  our  mills  and  our 
fields,  and  the}^  would  be  if  the  enlightened  policy  of 
Great  Britain  in  her  trade  relations  with  other  countries 
should  be  imitated  by  our  law-making  power. 

What  is  true  in  regard  to  our  trade  relations  with  the 
countries  I  have  named  is  true  as  to  other  nations.  The 
United  States  has  reached  the  point  where   freer  trade 


381 


with  other  nations  has  become  absolutely  necessary. 
The  greatest  producing  country  in  the  zvorld,  she  has  para- 
mount interests  in  international  trade.  With  wise  legisla- 
tion she  could  hold  the  keys  of  the  loorld's  commerce  and 
make  the  nations  her  tributaries.  Could  there  be  anything 
more  unwise  than  the  legislation  which  prevents  the  most 
productive  of  nations  from  sharing  in  the  trade  which  she 
ought  to  control  / 

Fourth.  The  tariff,  if  it  has  not  been  the  cause  of  the 
decline,  I  might  almost  say  disappearance,  of  ourforeign 
merchant  marine,  stands  in  the  way  of  its  restoration. 
No  nation  has  ever  been  and  none  ever  will  be  great  in 
all  that  constitutes  superior  nationality,  without  combin- 
ing with  its  other  powers  an  effective  mercantile  marine. 
Sixty  years  ago  the  United  States  was  the  second  mari- 
time power  in  the  world.  Now  vShe  is  excelled  by  nations 
that  then  had  scarcely  a  merchant  ship.  Washed  by  both 
oceans,  Avith  the  finest  harbors  in  the  world,  with  ship- 
wrights of  unequaled  skill,  an  incipient  navy  of  good 
promise, she  has  no  standing  as  a  maritime  nation.  She  has, 
it  is  true,  vessels  upon  her  great  lakes.  She  has  vessels 
engaged  in  the  coastwise  trade  in  which  foreigners  can- 
not participate,  and  one  or  two  lines  in  the  West  India 
and  South  American  trade,  and  one  between  California 
and  the  East;  but  in  the  carrying  trade  on  the  Atlantic, 
between  the   New  World  and  the  Old,  she  has  no  share. 

No  American  who  is  proud  of  his  countr}'  can  sup- 
press feelings  of  humiliation  when  he  visits  the  London 
and  Liverpool  docks  and  looks  in  vain  for  the  stripes  and 
stars.  Every  inhabitant  of  the  great  republic  who  goes 
to  Europe  pays  tribute  to  foreign  ship-owners;  every 
pound  of  freight  that  crosses  the  Atlantic  adds  its  mite 
to  their  gains.  That  the  carrying  trade  is  profitable  is 
show^n  by  the  fact  that  new  ships  are  every  year  added 
to  the  established  lines.  Why,  then,  it  may  be  asked, 
have  not  capitalists  in  the  United  States  engaged  in  it? 
Why  have  they  permitted  this  immense  trade  to  be  mo- 
nopolized b}^  foreigners?  The  answer  is  at  hand.  When 
what  was  left  of  our  foreign  shipping — after  iron  and 
steel  were  substituted  for  wood  in  the  construction  of 
ships — was  driven  from  the  ocean  by  Confederate  cruis- 
ers, the  carrying  trade  went  from  necessity  into  foreign 


882 

hands.  After  the  war  the  tariff  duties  upon  the  foreign 
materials  which  were  needed  for  ships  put  a  check  upon 
ship-building  in  the  United  States,  and  a  barbaric  law 
prohibited  the  registration  of  foreign-built  ships,  so  that 
in  this  great,  free  country  ships  could  neither  be  built 
nor  purchased. 

Not  only  has  the  carrying  trade  between  the  United 
States  and  Europe  been  resigned  to  foreigners,  butnpth- 
ing  has  been  done  for  the  support  of  our  West  Indian 
and  South  American  lines.  The  amount  allowed  to 
United  vStates  ships  for  carrying  the  mails  and  bringing 
home  disabled  seamen  has  hardly  been  sufficient  to  cover 
the  cost.  In  the  opinion  of  our  law^  makers,  there  is  no 
interest  that  ought  to  receive  the  fostering  care  of  the 
Government  but  the  manufacturing  interest,  and  that 
has  been  overdone  by  protection. 

lyooking  at  the  subject  as  disinterestedly  as  an  Amer- 
ican citizen  can,  I  see  nothing  to  prevent  the  conclusion 
that  the  present  tariff  is  at  w^ar  with  the  best  interests  of 
the  country.  It  is  continued  by  being  made  a  party 
question  and  the  free  use  of  money  in  elections,  but  un- 
less it  is  true  that  no  republican  government  can  long 
be  honestly  and  wisely  administered,  which  I  do  not  be- 
lieve, its  days  are  nearly  numbered.  The  subject  is 
now  better  understood  than  it  has  been.  Many  manu- 
facturers are  forced  to  concede  that  they  need  wider 
markets  more  than  protection.  Farmers  are  learning 
that  the  home  markets,  and  the  foreign  markets  that  are 
still  open  to  them,  are  insufficient  to  secure  living  prices 
for  their  crops.  There  is,  I  am  sure,  no  risk  in  predict- 
ing that  if  the  present  Congress  does  not  revise  the  tariff 
and  free  it  from  the  features  that  stand  in  the  way  of 
international  trade,  the  power  in  the  next  Congress  will 
be  in  the  hands  of  those  who  will  push  the  reform  of  it 
to  an  extreme.  That  it  is  soon  to  undergo  thorough 
overhauling  is  quite  certain.  Shall  the  work  be  done  b}^ 
its  friends  or  its  opponents?  is  a  question  to  be  decided 
by  the  present  Congress. 

[Just  as  I  had  finished  this  letter  I  found  among  my 
papers  the  following  from  Andrew  Jackson  to  John  M. 
Davis,  written   nearly   forty-six  years   ago.     I   insert  it 


383 


here,  because  it  presents  the  views  which  I  have  always 
entertained  upon  the  tariff  question,  and  which  are  in 
accord  with  the  views  of  tariff  reformers  of  the  present 
day:] 

Hermitage,  June  2fih,  1S44. 

Dear  Sir:  I  take  pleasure  in  acknowledging  the  receipt  of 
your  letter  of  the  13th  inst.,  although  my  health  does  not  en- 
able me  to  answer  fully  your  inquiries. 

The  slanders  to  which  you  allude,  of  the  character  of  Gov- 
ernor Polk,  will  be  corrected  by  the  good  sense  of  the  people, 
and  recoil  upon  the  reckless  individuals  that  have  fabricated 
them.  There  never  was  a  purer  man  than  Governor  Polk.  I 
have  known  him  from  his  boyhood.  In  his  private  life  he  has 
been  remarkable  for  the  exercise  of  those  charities  which  dis- 
tinguish the  amicable,  unobtrusive,  and  useful  Christian,  per- 
forming always  his  duty,  and  in  such  a  manner  as  to  secure  the 
respect  and  good  will  of  all  his  neighbors  and  acquaintances. 
The  assertion  that  he  has  fought  a  duel,  is  a  gambler,  and  pro- 
fane swearer,  is  a  bare-faced  falsehood,  and  would  be  so  pro- 
nounced by  any  gentleman  acquainted  with  Governor  Polk, 
whether  he  be  Democrat  or  Whig  in  politics. 

Of  the  views  entertained  by  Governor  Polk  on  the  bank  and 
other  national  questions  reference  can  be  had  to  his  speeches 
in  Congress  and  such  authoritative  explanations  as  will  be 
made  public  in  due  t  me  for  the  information  of  the  people.  In 
relation  to  the  tariff,  you  wnll  find  his  opinions  satisfactory. 
He  is  in  favor  of  a  tariff  for  revenue,  and  within  the  limits 
of  revenue,  making  such  discrimination  in  favor  of  articles  of 
domestic  manufacture  as  will  ensure  reasonable  protection  to 
home  industr}'.  He  goes  for  protection  as  the  incident  of  reve- 
nue, and  not  for  revenue  as  the  incident  of  protection,  and 
within  his  principle  it  is  now  admitted  by  the  candid  of  all 
parties  that  all  the  protection  necessary  to  the  prosperous  and 
rapid  development  of  our  home  manufactures  can  be  afforded 
without  injury  or  oppression  to  any  agricultural  or  commercial 
interest. 

Remember  me  kindly  to  my  namesake  and  to  all  the  members 
of  your  family,  and  believe  me  truly, 
Your  servant. 

ANDREW  JACKSON. 

John  M.  Davis,  Esq., 

Wilkins  Post  Office, 


LETTER 

TO    THE 

NEW   YORK   TIMES,  JANUARY  31,  1890, 


LETTKR 

TO    THE 

NEW   YORK    TIMES,  JANUARY  31,   1890. 


In  the  article  upon  "Free  Trade  and  Protection,"  by 
the  Right  Hon.  W.  E.  Gladstone,  in  the  North  American 
Reviciv  for  January,  and  answered  in  the  same  number 
by  the  Hon.  J.  G.  Blaine,  Mr.  Gladstone  treats  the  ques- 
tion of  international  trade  as  if  it  were  not  only  an 
economic,  but  also  a  scientific  question,  applicable  alike 
to  all  countries  and  to  all  conditions  of  the  same  coun- 
try; to  the  United  vStates  and  to  Great  Britain;  to  the 
former  when  she  was  dependent  upon  the  latter  for  man- 
ufactured goods,  and  now,  when  she  is  a  leader  among 
the  nations,  in  the  extent  and  variety  of  her  manufac- 
tures. 

Mr.  Blaine,  on  the  contrary,  disregards  the  doctrine 
of  scientific  political  economy  in  its  bearings  upon  inter- 
national trade,  or  rather,  he  does  not  consider  political 
economy  as  one  of  the  exact  sciences,  whose  doctrines 
are  equally  applicable  to  all  countries  and  to  all  stages 
of  their  development. 

Mr.  Gladstone  is  a  believer  in  free  trade — the  free 
trade  which,  in  connection  with  her  manufactures,  has 
made  that  little  kingdom,  not  a  fortieth  part  as  large  as 
the  United  vStates,  the  greatest  maritime  and  manufac- 
turing nation  in  the  world,  upon  whose  colonial  domains 
the  sun  never  sets. 

Mr.  Blaine  believes  that  it  is  to  her  protective  policy 
that  the  unparalleled  growth  and  general  prosperity  of 
the  United  States  are  mainly  attributable. 

Mr.  Gladstone  regards  international  trade  as  barter, 
and  believes  that  such  trade,  essential  as  it  may  be  to 


388 


national  greatness,  cannot  be  healthily  carried  on  unless 
this  is  its  character. 

Mr.  Blaine  knows,  of  course,  that  trade  between  na- 
tions must  mainly  be  carried  on  by  mutual  exchanges; 
that  no  nation  can  be  long  engaged  in  trade,  with  ad- 
verse balances  constantly  accruing,  to  be  settled  with 
coin,  unless  coin  is  one  of  its  chief  products;  but  he  be- 
lieves that  such  are  the  circumstances  of  the  United 
States  that  she  can  only  be  prosperous  by  ignoring  the 
policy  of  free  exchanges;  that  nothing  could  be  more 
injurious  to  her  people  than  for  her  to  open  her  ports  to 
the  manufactures  of  other  countries  free  from  import 
duties,  or  subject  only  to  such  duties  as  might  be  needed 
for  revenue;  that  owing  to  cheaper  labor  in  Europe  man- 
ufacturers in  the  United  States  could  not,  even  in  their 
home  markets,  compete  with  European  manufacturers. 

Mr.  Gladstone  goes  beyond  the  economic  question 
and  speaks  of  protection  as  a  moral  question,  and  by 
this  presentation  of  it  he  has  in  certain  quarters  sub- 
jected himself  to  ridicule.  That  there  is  anything  im- 
moral in  a  protective  tariff  has  never  entered  into  the 
conception  of  protectionists,  but  to  Mr.  Gladstone  there 
could  be  no  other  conclusion.  He  regards  monopoly  as 
the  necessar}^  outgrowth  of  protection,  and  consequently 
at  war  with  freedom;  that  protective  duties  lead  to 
wasteful  expenditures  of  the  public  moneys;  that  they 
are  burdensome  to  consumers,  and  unequal  in  their  bur- 
dens. If  these  views  are  sound,  is  he  not  right  in  de- 
nouncing a  protective  tariff  as  immoral  ? 

Mr.  Blaine  presents  no  argument  against  these  views 
upon  the  moral  bearing  of  the  question,  because,  per- 
haps, he  does  not  consider  it  necessary. 

GREAT    BRITAIN'vS     REVENUE   SVSTEM. 

Now,  although  it  may  be  presumptuous  in  me  to  avow 
it,  I  am  far  from  being  in  full  s^nnpathy  with  either  of 
these  distinguished  statesmen.  While  I  believe  that  the 
people  of  all  nations  would  be  better  and  happier  if  all 
obstructions  to  international  trade  were  removed,  and  to 
this  extent  agree  with  Mr.  Gladstone,  I  see  no  grounds 
for  even  the  hope  that  this  will  be  done  on  this  side  of  the 


HS9 

millennium.  Great  progress  has  been  made  within  the 
present  century  in  the  assimilation  of  nations,  but  they 
are  still  wide  apart  in  their  forms  of  government,  the 
nature  of  their  productions,  their  land  tenures,  and  con- 
sequently in  their  modes  of  taxation.  So  different  are 
they  in  these  respects  that  a  system  of  revenue  which 
would  be  well  suited  to  one  nation  might  be  quite  un- 
suited  to  another.  Free  trade  has  proved  to  be  wise 
and  wholesome  for  Great  Britain.  She  is  rich  and  able 
to  support  an  expensive  government  by  taxes  upon  land 
and  incomes,  but  she  has  been  unable  to  doctrinate  her 
Canadian  and  Australian  colonies  with  her  free-trade 
policy,  nor  has  it  been  long  since  she  pushed  protection 
to  prohibition.  A  great  many  unwise  things  can  be 
found  in  the  tariff  laws  of  the  United  States,  but  noth- 
ing so  uswise  as  were  the  corn  laws  of  Great  Britain. 
We  sustain  protective  duties  on  the  ground  that  they  en- 
courage home  production;  we  do  not  put  heavy  duties, 
if  any,  upon  articles  that  we  cannot  produce  and  which 
are  in  common  use.  Taxes  upon  tea  and  coffee  were 
bad  enough,  but  we  never  had  anything  upon  our  tax 
rolls  so  bad  as  the  British  tax  upon  breadstuffs,  which 
everybody  needed  and  which  could  not  be  produced  in 
sufficient  quantity  at  home. 

No  nations  so  closely  resemble  each  other  in  the  char- 
acter of  their  people  and  the  essential  nature  of  their 
governments  as  the  United  States  and  Great  Britain,  and 
yet  they  differ  decidedly  in  their  revenue  systems,  and 
they  thus  differ,  because  they  differ  not  only  in  age, 
but  in  extent  of  territory  and  governmental  control. 
Great  Britain  has  passed  the  period  of  rapid  growth; 
her  people,  although  not  homogeneous,  are  so  fixed  in 
habits  as  to  be  rarely  affected  by  such  movements  as 
have  frequently  disturbed  the  equilibrium  of  other  na- 
tions. Parliament  is  her  only  law-making  power.  Her 
colonies  are  to  some  extent  self-governing,  but  England, 
Scotland,  and  Ireland  are  united  under  one  head  and 
subject  to  one  jurisdiction.  Neither  has  control  of  its 
local  interests — such  control  as  Ireland  is  now  struggling 
to  obtain.  Taxes  are  high  in  Great  Britain;  her  debt 
is  large  and  her  expenditures,  imperial  and  municipal, 
are  heavy,  but  in  no  other  country  are  they  so  little  bur- 
densome, so  little  felt  by  the  people  generally. 


Having  substantially  adopted  the  policy  of  free  trade, 
she  looks  chiefly  to  lands  and  incomes  for  her  revenue, 
and  as  the  lands  are  held  by  comparatively  few  and  the 
taxes  upon  them  constitute  a  part  of  their  rentals,  they, 
like  the  income  taxes,  fall  upon  those  who  are  able  to 
pay  them.  With  wisdom  worthy  of  imitation,  she  im- 
poses no  taxes  upon  productive  industry.  That  has  full 
play,  and,  if  not  aided  by  the  Government,  nothing  is 
done  to  impair  or  check  its  freest  exercivSe.  For  Great 
Britain  her  revenue  system  seems  to  me  an  exhibition 
of  statesmanship  of  the  highest  order.  The  members 
of  Parliament  receive  no  pay  for  their  services,  but  her 
Cabinet  Ministers — the  advisers  of  Her  Majesty,  who 
are  ex-officio  members — receive  large  salaries,  as  do  her 
judges  and  other  officers.  Hers  is  not  a  niggardly  Gov- 
ernment, but  it  is  not  wasteful.  The  rich  tax-payers 
have  much  to  say  about  the  public  expenditures,  and 
they  are  careful  to  see  to  it  that  they  are  neither  mis- 
directed nor  extravagant. 

OUR  STATE,  CITY,  AXD  COUNTY  TAXES. 

This  revenue  system,  admirable  as  it  is  for  Great 
Britain,  is  not  suited  to  the  United  States.  Our  Govern- 
ment, while  a  government  of  the  people  and  for  the 
people,  and  sovereign  in  the  exercise  of  its  constitu- 
tional powers,  is  also  a  government  of  States.  Each 
State  is  entitled  to  two  Senators  in  the  Federal  Congress 
and  at  least  to  one  Representative,  and  to  as  many  more 
as  it  is  entitled  to  by  its  population;  so  that  the  little 
State  of  Delaware — and  each  of  the  States  recently  ad- 
mitted into  the  Union — with  its  single  member  in  the 
House,  has  the  same  numerical  strength  in  the  Senate 
that  the  great  State  of  New  York  has  with  its  thirty- 
four  members.  Each  State  has  also  a  government  of 
its  own — a  governor,  a  legislature,  a  supreme  and 
other  courts,  and  all  officers  which  are  needed  to  per- 
form official  duties  in  independent  States.  Except  so 
far  as  the  powers  of  their  legislatures  are  limited  by  the 
Federal  Constitution,  they  are  sovereigns.  Each  has 
the  power  to  determine  what  shall  be  the  qualification 
of  voters  and   the  manner  in  which  elections  shall  be 


391 


held;  each  has  the  power  to  contract  debts  for  internal 
improvements  and  for  other  purposes. 

Each  has.  of  course,  power  to  tax  for  the  support  of 
its  State  government.  By  each  authority  is  given  to  its 
cities  and  counties  to  levy  and  collect  taxes  for  the  pay- 
ment of  their  current  expenses,  and  so  freeh'  is  this 
authority  exercised  that  in  some  States  the  State, 
county,  and  city  taxes  amount  to  nearly  tw^o  per  cent, 
upon  all  real  and  personal  property.  A  large  part  of  the 
personal  property  escapes  taxation,  and  the  real  estate 
may  be  undervalued;  but  taxes  are  heavy  in  all  the 
States,  in  some  burdensome.  If  to  the  State  and  county 
and  city  taxes  the  indirect  taxes  to  which  consumers  are 
subject  by  protective  duties  upon  imports  w^ere  added, 
it  might  be  said  that  there  is  no  civilized  nation  in  the 
world  in  w^iich  the  aggregate  of  taxation  is  so  high  as 
in  the  United  States.  It  might  be  said  also  that  there  is 
no  other  country  so  able  to  bear  it. 

Now,  as  States,  counties,  and  cities  are  supported  by 
direct  taxation  upon  lands  and  personal  property,  and 
these  taxes  are  as  heav}'  as  a  large  part  of  the  tax-pay- 
ers are  able  to  bear,  the  Federal  Government  must  be 
mainly  supported  b}^  duties  upon  imports.  Taxes  upon 
incomes  have  been  resorted  to  and  might  be  again  in 
periods  of  emergency,  but  so  difficult  was  it,  and  w^ould 
be  again,  to  make  such  taxes  equal,  where  incomes  are 
so  uncertain  and  are  so  easily  concealed,  that  it  may  be 
regarded  as  a  fixed  fact  that  neither  income  taxes  nor 
taxes  upon  the  States  will  be  again  resorted  to  by  the 
Federal  Government.  It  therefore  follows  that  upon  im- 
port duties  must  the  chief  reliance  of  the  Government 
for  revenue  be  based. 

WHY    FRKE   TRADE    IS    IMPOSSIBI.E. 

Considerable  revenue  will,  as  heretofore,  be  derived, 
under  an  internal  revenue  system,  from  taxes  upon  do- 
mestic manufactures,  especially  w^iiskey  and  tobacco, 
but  the  main  reliance  of  the  Government  must,  as  has 
always  been  the  case,  be  upon  a  tariff,  and  as  the  public 
expenditures  are  large,  and  are  more  likel}^  to  be  in- 
creased than  diminished,  the  tariff  can  never  be  a  low 


392 


one.  Besides,  the  people  willingly  bear  taxation  upon 
what  they  use,  while  they  would  rebel  against  much 
higher  taxes  if  directly  assessed. 

Free  trade  may  be  among  the  things  hoped  for,  but 
it  is  one  that  never  will  be  realized  by  the  people  of  the 
United  States.  Every  intelligent  man  in  the  United 
States  knows  this,  and  yet  there  are  men  in  high  places, 
and  managers  of  influential  public  journals,  who  speak 
of  those  who  favor  a  reform  of  the  tariff  as  being  free 
traders  or  tariff  smashers.  As,  therefore,  from  absolute 
necessity,  there  must  be  a  tariff,  it  is  of  the  last  import- 
ance that  it  should  be  so  framed  as  not  to  be  unneces- 
sarily burdensome  upon  consumers,  nor  at  war  with  use- 
ful branches  of  domestic  industry,  nor  a  bar  to  free  ex- 
changes with  foreign  countries.  It  has  been  clearl}^ 
shown  by  the  advocates  of  tariff  reform  that  the  present 
tariff  is  not  of  this  character;  that  it  is  unnecessarily 
burdensome  to  the  great  body  of  the  people;  that  it  is 
at  war  with  many  branches  of  domestic  industry;  that 
it  is  a  bar  to  international  trade.  It  was  created  as  a 
war  measure,  in  a  great  national  emergency,  to  strengthen 
the  credit  of  the  Government  and  to  secure  large  revenue. 
These  objects  having  been  accomplished,  it  should  long 
since  have  been  subject  to  thorough  revision  to  accom- 
modate it  to  the  changed  condition  of  the  country. 

The  question,  therefore,  which  for  years  has  demanded 
and  now  imperatively  demands  the  attention  of  Congress, 
is  not  between  a  tariff  and  free  trade,  but  whether  the 
tariff  should  be  mainly  for  protection  or  mainly  for  reve- 
nue; in  other  words,  whether,  in  the  imposition  of  duties, 
revenue  should  be  the  object  and  protection  the  incident, 
or  whether  protection  should  be  the  object  and  revenue 
the  incident.  As  my  opinion  upon  this  great  point  has 
been  fully  and  frequently  expressed,  I  am  not  disposed 
to  repeat  it.  I  would  onl}-  remark  in  passing,  that  as 
large  revenues  must  be  derived  from  duties  upon  im- 
ports, it  will  be  very  difficult  .so  to  modify  the  tariff  that 
it  will  fail  to  be  protective.  I  proceed,  therefore,  to  ex- 
amine what  Mr.  Blaine  says  about  the  effects  of  tariff 
legislation  upon  the  public  welfare.  He  takes  broadl}^ 
the  po.sition  that  not  only  has  the  country  been  prosper- 
ous under  protective  tariffs,  but  that  the  reverses  to  which 


393 

it  has  been  subject  in  its  onward  and  upward  career  have 
been,  with  a  single  exception,  the  legitimate  conse- 
quences of  an  abandonment  of  the  protective  policy. 
To  prove  the  correctness  of  this  statement  he  refers  to 
the  periods  in  which  these  reverses  occurred. 

THK  REVERSES  OF  1817  AND  A   FEW  FOEEOWING   VEARS. 

Of  these  reverses  I  have  only  to  say  that  if  I  have 
read  correctly  the  financial  history  of  that  period,  these 
reverses  were  not  the  result  of  the  changes  of  the  tariff, 
but  of  the  tide  of  speculation  which  swept  over  the 
country  near  the  close  of  the  war  and  at  its  termination, 
diminishing  industry  and  plunging  people  into  debt. 
These  reverses,  like  those  of  later  days,  were  inevitable, 
and  they  would  have  been  of  equal  severity  if  the  war 
tariff  had  been  continued.  The  seeds  of  financial  trouble 
had  been  sowed  broadcast  before  the  tariff  was  touched, 
and  they  bore  legitimate  fruits;  they  were,  in  fact,  but 
a  repetition  of  what  occurred  at  the  close  of  the  Revo- 
lutionary war,  wdien  there  was  no  tariff. 

THE   REVERSES   OF    1837. 

Of  these  reverses  and  all  subsequent  ones  I  can  speak 
advisedly,  because  I  held  positions  of  financial  respon- 
sibility and  had  personal  interests  at  stake.  I  was  in 
1837,  and  had  been  for  a  considerable  time,  the  manager 
of  the  branch  at  Fort  Wayne  and  a  member  of  the  board 
of  control  of  the  State  Bank  of  Indiana.  Mr.  Blaine's 
statement  "that  the  years  1834-5-6  were  distinguished 
for  all  manner  of  business  hazard"  but  faintly  describes 
them.  They  were  years,  especially  1836,  of  the  wildest 
speculation.  In  the  East  it  was  varied  in  character,  but 
its  dangerous  elements  were  excessive  credits,  and  there 
were  few  things  that  could  be  bought  or  sold  that  were 
not  affected  by  it. 

In  the  West  it  was  confined  to  lands  unimproved 
and  town  lots,  many  of  which  never  had  any  exist- 
ences, except  upon  the  recorded  plats.  It  was  specu- 
lation similar  to  that  in  the  timber  lands  of  Maine  a 
few  years  before.     Lands  bought  of  the   Government 


.^94 


at  $1.25  per  acre  were  soon  sold  on  credit  at  ^4,  $5,  and 
in  some  cases  $10.  Hundreds  of  tracts  were  laid  off  in 
tovvn  lots  where  the  original  forests  were  still  standing. 
What  took  place  under  my  own  observation  seems  now 
to  be  too  absurd  to  have  been  real.  On  the  Maumee 
River,  from  its  mouth  on  Lake  Erie,  there  was  for  miles 
a  succession  of  towns;  some  of  them,  like  Maumee  Cit}', 
Perrysburg,  Manhattan,  and  Toledo  were  realities,  but 
most  of  them  existed  upon  paper  only.  In  the  spring  of 
1836  a  young  man  whom  I  met  at  Maumee  City  said  to 
me  that  he  had  made  a  great  deal  of  money  in  a  few 
months.  To  my  inquiry  how  he  had  made  it,  he  replied: 
"By  buying  and  selling  lots.  Maumee  City,"  said  he, 
"lies,  as  you  know,  at  the  foot  of  the  Rapids,  and  is 
destined  to  be  one  of  the  great  cities  of  the  West;  prop- 
erty is  rising  rapidly  in  value,  and  I  am  buying  and 
selling  every  da3^" 

"How  did  you  raise  the  money  to  commence  with?" 

"Oh,  very  little  money   is  required  in   this  business. 

I  pay  when  I  bu}-,  and  I  require  when  I  sell  a  lot  a  few 

dollars  to  bind   the  bargain,    but  nearly  everything  is 

done  upon  credit." 

On  my  way  from  New  York  to  Fort  Wayne,  in  the 
same  year,  I  stopped  over  night  at  a  hotel  in  Toledo. 
After  dinner  I  noticed  that  there  was  a  gathering  of  gentle- 
men in  the  parlor,  and  in  the  course  of  the  evening  I 
w^as  waited  upon  by  one  whom  I  knew  and  invited  to 
join  it.  "Our  rule,"  said  he,  "is  to  admit  no  one  to 
these  meetings  who  is  not  worth  $r  00, 000.  As  you  are 
a  banker,  you  must  be  worth  at  least  that  "  This  was  far 
from  being  the  fact,  but  I  accepted  the  invitation.  The 
company  consisted  of  gentlemen,  some  of  whom  I  knew 
personally  and  others  by  reputation.  The}^  were  poli- 
ticians, scholars,  writers,  and  one  or  two  of  them  were 
authors  of  considerable  renown,  but  not  one  was  there 
whom  I  recognized  as  being  engaged  in  regular  business 
pursuits.  It  was  a  sort  of  private  exchange,  at  which 
the  members  made  themselves  rich  by  buying  and  sell- 
ing to  each  other  lands  and  town  lots.  There  was  at  times 
a  good  deal  of  excitement,  much  like  that  which  is  wit- 
nessed in  the  New  York  Stock  Exchange.  When  the 
meeting  closed   everyone   felt  that  he  was  richer  than 


895 


when  it  opened.  In  a  few  brief  months  there  was  not 
one  of  these  hundred-thousand-dollar  men  who  was  worth 
a  hundred  thousand  cents. 

RESULTS    OF   THF,   vSPKCULATlVE   MANIA. 

The  same  speculative  mania  prevailed,  to  some  extent, 
all  over  the  country.  It  originated  in  unwise  extension 
of  the  credit  system,  which  was  mainly  the  result  of  the 
removal  of  the  Government  deposits  from  the  United 
States  Bank  and  the  placing  of  them  in  State  banks. 
When  the  deposits  were  removed  there  was  among  con- 
servative men  great  apprehension  that  the  effect  would 
be  severe  financial  trouble.  To  prevent  this,  it  seemed 
to  be  the  understanding  between  the  secretary  of  the 
Treasury,  acting  under  the  direction  of  the  President, 
and  the  banks — pet  banks  as  they  are  called — that  as 
they  had  been  favored  by  the  Government  in  the  use  of 
the  public  moneys,  they  should  deal  liberally  with  their 
customers.  This  they  did,  and,  as  their  capitals  were 
sufficient  to  supply  the  demands  of  healthy  business,  the 
loans  of  the  Government  deposits  were  made  to  men 
who  were  engaged  in  speculative  enterprises.  Then, 
too,  many  of  the  States  were  engaged  in  works  of  in- 
ternal improvement,  and  were  spending  large  amounts 
of  money  which  they  had  obtained  by  sales  of  their 
bonds  in  Europe. 

In  addition  to  the  large  volumes  of  currency  thus  put 
into  circulation,  a  bank  under  the  name  of  the  Pennsj^l- 
vania  Bank  of  the  United  States  was  chartered  by  Penn- 
sylvania, as  the  successor  of  the  United  States  Bank, 
with  the  same  capital  and  mostly  the  same  managers, 
which  not  only  loaned  its  money  in  a  manner  which 
savored  of  recklessness,  but  bought  large  quantities  of 
cotton  on  its  ow^n  account.  Never  were  credits  so  easil}^ 
obtained  or  so  unwisely  used;  never,  to  the  superficial 
observer,  had  the  country  been  so  prosperous. 

In  the  meantime,  however,  industry  was  declining  and 
all  kinds  of  agricultural  productions  were  commanding 
exhorbitant  prices.  Wheat  went  up  from  $\  to  $2  a 
bushel,  and  cotton  form  7  to  15  cents  a  pound.  A  spec- 
ulative fever  everywhere  prev^ailed  similar  in  character, 


896 


and  as  much  more  disastrous  in  consequences  as  it  was 
wider  in  extent,  to  the  vSouth  Sea  bubble  in  England, 
Conservative  men,  strangely  enough,  as  well  as  adven- 
turers, were  its  abettors  and  its  victims.  Banking  insti- 
tutions, and  especially  the  Government  depositories, 
were  in  a  great  measure  responsible  for  it,  and  not  a  few 
were  ruined. 

I  call  to  mind  one  case  which  interested  me  greatly. 
In  the  spring  of  1836  I  went  to  a  city  in  a  State  adjoin- 
ing Indiana  to  make  with  its  leading  bank  exchanges  of 
New  York  and  New  England  bank-notes  for  its  notes, 
which  were  receivable  at  the  Government  land  offices. 
As  I  knew  the  president  personally,  I  called  upon  him 
at  the  bank  after  banking  hours.  I  was  kindly  received, 
but  I  noticed  that  he  was  in  bad  humor,  which  he  did 
not  try  to  conceal,  the  cause  of  which  he  explained. 
"  I  have,"  said  he,  "  for  the  first  time  since  I  became 
president  of  the  bank  been  squarely  overruled  in  a 
matter  of  great  importance.  I  do  not  like,"  he  went 
on  to  say,  "the  business  outlook.  The  people  vSeem  to 
me  to  have  gone  mad,  and,  if  I  am  not  greatly  mis- 
taken, they  will  soon  find  out  that  the  prosperity  of  the 
country  is  unreal.  We  owe  the  Government  a  large 
amount  of  money,  and  as  we  have  enough  and  some- 
thing more  in  the  banks  of  New  York  to  pay  it,  at  the 
meeting  of  the  board  this  afternoon  I  introduced  a  reso- 
lution in  favor  of  paying  the  debt  and  dissolving  our 
connection  with  the  Government.  In  offering  the  reso- 
lution I  explained,  as  fully  as  I  was  able  to  do,  my  rea- 
sons for  doing  so.  I  was  listened  to  attentively,  but 
when  the  vote  was  taken  there  was  but  one  vote  (my 
own)  in  its  favor.  Not  only  was  the  resolution  voted 
down,  but  I  was  instructed  to  use  the  money  to  our 
credit  in  New  York  in  current  business  at  home.  To  my 
directors  the  idea  of  giving  up  the  use  of  a  large  amount 
of  mone}^  on  which  we  pay  nothing,  when  it  might  be 
loaned  at  high  rates  of  interest,  seemed  to  be  absurd. 
I  hope  they  are  right;  time  will  show."  Time,  and 
short  time  at  that,  did  show.  In  little  more  than  one 
year  this  great  bank,  which  up  to  the  time  of  its  con- 
nection with  the  Government  had  been  conservatively 
and    profitably    managed,     was    ruinously,     hopelessly 


397 


broken,  and  some  of  the  directors  who  was  its  borrow- 
ers went  down  with  it. 

AFTER    THE    PANIC    OF    1837. 

Of  the  reverses  of  1837  I  made  the  following  remarks 
in  my  report  as  Secretary  of  the  Treasury  in  1865: 

The  great  expansion  of  1835  and  1836,  endiugwith  the  terrible 
financial  collapse  of  1837,  from  the  effects  of  which  the  countr}- 
did  not  rally  for  years,  was  the  consequence  of  excessive  bank 
circulation  and  discounts,  and  an  abuse  of  the  credit  system, 
stimulated  in  the  first  place  by  Government  deposits  with  the 
State  banks,  and  swelled  by  currency  and  credits,  until,  under 
the  wild  spirit  of  speculation  which  pervaded  the  country,  labor 
and  production  decreased  to  such  an  extent  that  the  country 
which  should  have  been  the  great  food-producing  country  of 
the  world  became  an  importer  of  breadstuffs. 

The  balance  of  trade  had  been  for  a  long  time  favorable  to 
Europe  and  against  the  United  States,  and  also  in  favor  of  the 
commercial  cities  of  the  seaboard  aud  against  the  interior,  but 
a  vicious  system  of  credits  prevented  the  prompt  settlement  of 
balances.  The  importers  established  large  credits  abroad,  by 
means  of  which  they  were  enabled  to  give  favorable  terms  to 
the  jobbers.  The  jobbers  in  turn  were  thus,  and  by  liberal  ac- 
commodations from  the  banks,  able  to  give  their  own  time  to 
country  merchants,  who  in  turn  sold  to  their  customers  on  in- 
definite credit.  It  then  seemed  to  be  more  reputable  to  borrow 
money  than  to  earn  it,  and  pleasanter  and  apparently  more 
profitable  to  speculate  than  to  work.  And  so  the  people  ran 
headlong  into  debt,  labor  decreased,  production  fell  off,  and 
ruin  followed. 

This  w^as,  of  course,  a  panic  sharp  and  terrific,  but  it 
was  of  short  duration.  It  was  soon  followed  by  a  leth- 
argy, under  which  all  the  springs  of  enterprise  and  hope- 
fulness were  dried  up.  To  prevent  the  sacrifice  of  prop- 
ert}'  under  judicial  decrees,  stay  laws  and  appraisement 
laws  were  enacted  b}^  many  of  the  States,  which  only  ag- 
gravated the  trouble.  For  long,  weary  3'ears  the  leth- 
argy continued.  There  was  no  demand  for  an3^thing, 
except  the  necessaries  of  life,  and  all  these,  except  cloth- 
ing, were  sold  for  scarcely  enough,  and,  in  some  cases, 
not  enough,  to  pay  the  expenses  of  taking  them  to 
market.  I  witnessed  a  sale  in  1839  to  the  keeper  of  a 
hotel  in  Indianapolis  of  oats  at  10  cents  a  bushel  and 
fine  chickens  at  50  cents  a  do7,en.  The  same  year  I 
saw  thousands  of  barrels  of  flour  under  the  sheds  of  Suy- 


398 


dam,  Sage  &  Co.,  in  New  York,  which  they  were  offer- 
ing at  S3. 50  a  barrel.  Fat  cattle  were  selling  at  so  low 
a  price — $10  and  Si 2  a  head — that  m}-  brother  thought 
that  he  would  pack  a  few  barrels  of  beef  at  Fort  Wayne 
for  the  New  York  market.  He  did  so,  and  was  drawn 
upon  by  his  consignees  for  a  part  of  the  expenses  of 
transportation  not  covered  by  the  sales.  From  1837  to 
1 841  there  was  nothing  to  break  the  stagnation  but  the 
political  campaign  of  1840,  in  which  everybody  became 
enlisted  for  want  of  something  else  to  do.  In  the  fall 
of  1 841  a  reaction  began  to  appear.  This  became  de- 
cided in  1842,  before  the  tariff  of  that  year  went  into 
operation,  and  in  1845  the  country,  chastened  by  adver- 
sity, was  in  the  full  tide  of  healthy  and  wealth-produc- 
ing industry  and  enterprise.  This  continued  until  cred- 
its became  again  unwisely  expanded  and  speculation 
became  rife. 

THE   PANIC    OF    1 85  7. 

In  1857  I  was  the  president  of  the  Bank  of  the  State 
of  Indiana,  and  this  is  a  part  of  \vhat  I  said  about  the 
financial  troubles  of  that  year  in  the  report  from  which  I 
have  quoted: 

The  financial  crisis  of  1857  was  the  resuU  of  a  similar  cause 
to  that  of  1837,  namely,  the  unhealthy  extension  of  the  various 
forms  of  credit.  But,  as  in  this  case  the  evil  had  not  been  long 
at  work  and  productive  industry  had  not  been  seriously  dimin- 
ished, the  reaction,  though  sharp  and  destructive,  was  not 
general,  nor  were  the  embarrassments  resulting  from  it  pro- 
tracted. Now,  in  both  instances  the  expansion  occurred  while 
the  business  of  the  country  was  upon  a  specie  basis,  but  it  was 
only  nominally  so.  A  false  system  of  credits  had  intervened, 
under  which  payments  were  deferred  and  specie  as  a  measure 
of  value  and  a  regulator  of  trale  was  practically  ignored. 
Everything  moved  smoothly  and  apparently  prosperously  as 
long  as  credits  could  be  established  and  continued,  but  as  soon 
as  payments  were  demanded  and  specie  was  in  requisition,  dis- 
trust commenced  and  collapse  ensued.  In  these  instances  the 
expansions  preceded  and  contraction  followed  the  suspension, 
but  It  will  be  recollected  that  while  the  waves  were  rising  specie 
ceased  to  be  a  regulator  by  reason  of  a  credit  system  which 
prevented  the  use  of  it. 

Now,  with  all  due  respect  to  Mr.  Blaine,  I  express  the 
opinion  that  the  apparent  prosperity  which  preceded  the 


399 


revulsion  of  1837  and  the  real  prosperity  which  preceded 
the  crisis  of  1857  were  not  caused  by  the  tariff,  and  that 
the  reverses  which  followed  were  not  attributable  to  its 
reduction.  If  the  tariff  was  in  any  measure  instrumental 
in  producing  the  changes,  it  was  in  stimulating  the  ex- 
pansion which  terminated  in  disaster.  In  1857  I  was  a 
believer  in  the  tariff,  and  it  never  entered  my  head  to 
attribute  the  financial  troubles  of  that  3'ear  to  the  changes 
to  which  it  had  been  subjected. 

THE   FINANCIAL    TROUBLES   OF    1873. 

The  most  pressing  duty  which  I  had  to  perform  when 
I  became  Secretary  of  the  Treasury  in  1865  was  to  pro- 
vide the  means  to  pay  the  soldiers  and  to  meet  other 
pressing  demands  upon  the  Treasury.  This  was  done 
in  the  onl}-  wa}-  it  could  be  done,  by  the  sale  of  tempo- 
rary obligations  which  had  proved  to  be  attractive  to  in- 
vestors. After  this  had  been  accomplished  the  work  of 
funding  these  obligations  was  commenced  and  carried 
successfully  on  until  the  whole  amount — some  thirteen 
hundred  millions  of  dollars — were  converted  into  bonds. 
While  this  work  was  going  on  I  was  under  constant  ap- 
prehension of  a  financial  crisis  before  it  could  be  com- 
pleted. My  apprehension  was  unfounded,  but  only  as 
to  time.  The  crisis  was  postponed,  and  for  so  long  a 
period  that  the  opinion  generally  prevailed  that  the  vi- 
tality and  productive  power  of  the  country  were  so  great 
that  the  most  expensive  war  that  had  ever  been  waged 
could  be  concluded  and  great  expansion  of  credit  could 
be  checked  and  abridged  without  financial  disturbances. 
I  have  to  confess  that  this  was  ni}-  own  opinion,  but  the 
same  causes  which  produced  the  crisis  of  1858  were  at 
work,  and,  as  had  always  been  the  case,  the  revulsion 
came  when  least  expected. 

When  I  left  London  in  September,  1873,  to  come  to 
the  United  States,  the  financial  skies,  if  not  cloudless, 
were  not  threatening.  The  letters  which  were  received 
by  the  London  firm  from  its  New  York  partners  were 
encouraging,  and  I  had  no  reason  to  expect  anything 
but  a  pleasant  visit  to  my  old  home,  and  a  return  to 
London  under  auspicious   circumstances.     But  on    the 


400 


arrival  of  the  steamship  in  the  outer  harbor  I  was  met 
by  the  stunning  intelHgence  that  my  American  partners 
and  the  correspondents  of  the  Fort  Wayne  banking 
house  in  which  I  was  interested  had  failed;  that  all  the 
banks  except  the  Chemical  Bank,  w^hich  had  weathered 
all  storms,  had  suspended,  and  that  one  of  the  widest 
panics  which  had  ev-er  occurred  was  raging  throughout 
the  country.  The  crisis  was  a  terrible  one.  Although 
it  came  unexpectedly,  it  was  only  the  consummation  of 
influences  which  had  been  long  at  work  beneath  the 
financial  horizon.  In  extent,  in  fierceness,  and  disaster 
it  resembled  the  revulsion  of  1857.  It  was  not,  as  Mr. 
Blaine  states,  brought  about  by  the  losses  sustained  in 
the  civil  war,  which  had  been  terminated  eight  years 
before,  nor  by  the  destructive  fires  in  Chicago  and  Bos- 
ton. Great  losses  may  bring  about  what  are  called  hard 
times — not  panics.  It  was  produced  by  an  expansion  of 
currency  and  of  credits,  which  fostered  speculation,  and 
which  rarely  fail  to  terminate  in  financial  trouble. 

THE    PRESENT   CONDITION    OF    THE    COUNTRY. 

A  high  tariff  has  been  in  force  since  1862*  and  accord- 
ing to  Mr.  Blaine  the  country,  and  the  whole  country, 
under  its  beneficent  influence  ought  to  be  highly  pros- 
perous. The  circulating  medium  is  abundant.  Interest 
is  lower  than  ever  before  known.  Good  railroad  and 
municipal  four  per  cent,  bonds  command  a  premium; 
those  of  the  United  States  are  in  demand  at  124,  and  yet 
wdiat  is  the  condition  of  that  great  interest  which  under- 
lies all  other  interests — the  agricultural  interest  ?  What 
are  good  farming  lands  worth  in  Mr.  Blaine's  own  State, 
in  Vermont,  in  New  Hampshire,  in  all  the  Eastern 
States?  How  do  prices  of  farming  lands  in  the  Middle 
States  compare  with  the  selling  prices  of  such  lands  when 
the  tariff  was  light  in  comparison  wath  what  it  is  at  the 
present  time  ?  If  the  condition  of  the  farming  interest 
in  these  States  is  the  result  of  the  increase  of  cultivated 
acres  in  the  new  States  and  the  lessened  rates  of  trans- 
portation, how  happens  it  that  in  all  these  great  grain- 
producing  States  the  farmers  who  are  as  well  off  at  the 
close  of  the  year  as  they  were  at  the  beginning  are  the 
exceptions? 


401 

If  protection  is  the  beneficent  i)olicy  that  it  is  repre- 
sented to  l)e  by  Mr.  Blaine,  how  happens  it  that  even 
manufacturers  are  not  happy  ?  How  happens  it  that 
combinations  are  formed  by  them  to  curtail  production 
and  maintain  high  prices  ?  Are  tJie  consiuncrs  of  iiianu- 
facturcd  goods  benefited  by  legislation  that  prevents  for- 
eign coinpetition  and  enables  the  fu^ored  few  to  regidate 
prices  for  their  ozun  advantage  /  Is  a  country  really 
prosperous  when  cities,  which  are  the  consumers  of 
wealth,  are  rapidly  growing  and  farming  lands  are  de- 
creasing in  value;  when  rents  in  cities  are  enormously 
high  and  excellent  farms  are  not  attractive  to  tenants  at 
rentals  not  equal  to  six  per  cent,  interest  on  half  their 
appraised  value? 

I  asked  the  keeper  of  a  little  shop,  about  fifteen  feet 
wide  and  thirty  feet  deep,  on  Pennsylvania  avenue,  in 
Washington,  what  rent  he  was  paying.  "Three  hun- 
dred dollars  a  month,"  he  replied;  "33,600  a  year." 
Now,  I  venture  to  say  that  there  is  not  a  farm  in  Mary- 
land or  Virginia,  no  matter  what  may  be  its  si/.e  and  the 
cost  of  its  improvements,  that  rents  for  half  that  sum. 
Nothing  is  clearer  than  that  the  wealth-producing  power 
of  the  country  is  not  in  a  healthy  and  prosperous  condi- 
tion. 

In  all  this  I  unfortunately  differ  not  only  with  Mr. 
Blaine,  but  with  Mr.  Depew,  who  is  reported  as  sajdng 
in  a  recent  interview  that  the  condition  of  the  country  is 
"superb;"  that  so  enormous  were  the  last  year's  crops 
that  the  great  East  and  West  railroad  lines  have  more 
wheat  and  corn  and  beef  to  be  taken  to  the  seaboard 
than  they  can  carry.  This  may  be  true.  Well- managed 
roads  are  doing  well,  so  well  that  one  of  the  .greatest 
lines  can  spare  its  president  from  his  post  of  official  duty 
to  enlighten  the  people  by  his  eloquent  speeches  upon 
the  beauties  of  protection  and  other  subjects,  and  at 
the  same  time  declare  liberal  dividends.  But  hozv  is  it 
with  the  fanners,  by  ivhose  productive  labor  the  railroads 
are  supported  /  A?r  they  satisfied  with  the  present  and 
hopeful  for  the  future/  If  Mr.  Depew  will  extend  his 
tours  to  Minnesota  and  Iowa  and  Kansas  and  Nebraska 
he  will  discover  that,  although  they  are  the  most  fertile 
States  in  the  Union,  the  condition  of  their  people  is  far 


402 

from  being  "superb."  He  will  discover,  also,  in  travel- 
ing over  the  country,  if  he  keeps  his  eyes  open,  that  it 
is  the  middlenien,  the  men  who  handle  the  agricultuyal 
prodnetlons,  and  the  railroads  that  are  making  money, 
while  the  producers  are  unable  to  make  "both  ends 
meet,"  no  matter  how  industrious  and  economical  they 
may  be.  The  keeper  of  a  stall  in  Washington  Market 
makes  more  money  in  buying,  cutting  up,  and  selling 
an  ox  than  the  farmer  receives  for  raising  it.  This  may 
be  superb  for  the  stall  keeper,  but  not  exactly  superb 
for  the  farmer, 

A    MISTAKEN    ARGUMENT. 

A  good  part  of  Mr.  Blaine's  article  is  taken  up  in  com- 
paring the  growth  of  the  United  States  under  a  protec- 
tive tariff  with  that  of  Great  Britain  under  free  trade. 
He  says  that  in  twenty  years  Great  Britain  added  to  her 
wealth  $15,000,000,000,  while  the  United  States  added 
to  hers  nearly  S33, 000, 000, 000;  that  the  population  of 
Great  Britain  increased  within  the  same  period — a  period 
of  her  greatest  prosperit}- — 6,000,000,  while  the  popu- 
lation of  the  United  States  increased  18,000,000.  'Such 
statements  show  that  the  progress  of  the  United  States  in 
wealth  and  population  under  a  protective  tariff  far  ex- 
ceeded that  of  Great  Britain  under  free  trade.  Does  this 
prove  that  free  trade  is  not  favorable  to  Great  Britain 
and  that  protection  is  the  cause  of  prosperity  in  the 
United  States  ?  Great  Britain  is  an  old  and  small  coun- 
try, whose  surplus  population  has  been  steadily  flowing 
to  her  colonies  and  to  the  United  States,  and  w'hose  im- 
mense wealth  is  the  result  of  gainful  industry.  The 
United  States  is  a  country  of  immense  extent,  whose 
wealth  has  not  only  been  created  by  her  manufactures, 
but  also,  and  to  a  much  greater  extent,  by  the  millions 
of  millions  of  acres  of  wild  lands  which  have  been  con- 
verted into  productive  farms  and  flourishing  towns.  The 
United  States  has  not  only  grown  in  population  by  nat- 
ural increase,  but  also  by  the  throwing  open  of  her  ports 
and  inviting  the  people  of  all  countries  to  become  citi- 
zens of  the  great  republic.  The  real  cause  for  wonder 
is,  not  that  the  United  States  has  becorne  so  rich  and 


403 

populous,  but   that  Great  Britain  has  gained  so  much  in 
the  same  direction. 

The  argument  in  favor  of  protective  duties,  based 
upon  such  a  comparison,  is  totally  unfounded,  and  I  am 
surprised  that  so  able  a  man  as»Mr.  Blaine  should  have 
presented  it,  nor  would  he  if  he  had  not  become  so 
wedded  to  the  policy  of  protection  that  he  sees  no  evi- 
dences of  national  prosperity  that  are  not  based  upon  it, 
and  foresees  no  ill  that  will  not  be  the  result  of  its  aban- 
donment. That  the  United  States  has  been  largely  en- 
riched by  her  manufacturers  is  admitted,  but  has  not  her 
enrichment  been  largely  at  the  expense  of  the  great  body 
of  the  people?  She  has  rapidly  increased  in  population, 
but  this  increase  has  been  largely  the  result  of  the  de- 
mands of  her  manufacturers  for  cheap  labor.  Hoiv  ex- 
pensive this  cheap  labor  may  prove  to  be,  i?i  the  character 
of  the  laborers,  is  a  question  which  is  yet  to  be  solved.  The 
premonitions  that  come  from  our  large  cities  on  this 
head  are  very  far  from  being  comforting. 

If  Mr.  Blaine  had  seen  the  West  as  I  saw  it  in  1833, 
when  more  than  three-quarters  of  such  States  as  Michi- 
gan, Indiana,  Illinois,  and  Missouri  were  untouched 
by  the  plow,  and  all  beyond  was  a  magnificent  but  well- 
nigh  trackless  wilderness,  and  should  see  it  as  it  now  is, 
he  would  not  attribute  the  growth  of  the  United  States 
to  protection,  nor  would  he  undertake  to  sustain  his 
favorite  theory  by  comparing  that  growth  to  the  slower 
growth  of  the  United  Kingdom. 

No  one  can  tell  what  would  have  been  the  condition 
of  the  country  if  the  tariff  had  been  radically  changed 
at  the  close  of  the  civil  war,  but  this  we  do  know,  that 
its  present  condition  is  not  healthy.  It  is  the  greatest 
producing  country  in  the  world,  and  therefore  needs  the 
widest  markets  for  its  productions.  With  all  needed 
markets  open  to  it,  it  has  no  well  defined  and  mutually 
])rofitable  trade  even  with  South  America.  Its  manu- 
factures as  well  as  its  agricultural  productions  exceed 
not  only  the  home  demand,  but  what  is  left  to  it  of  the 
foreign  demand,  and  as  its  productions  are  increasing 
more  rapidly  than  the  demand  for  them,  it  is  impossible 
for  me  to  see  where  relief  is  to  come  from  except  from 
increase  of  our  foreign  trade,  which  can  only  be  brought 
about  bv  a  reform  of  the  tariff. 


404 


As  I  have  said,  we  do  not  know  what  would  have  hap- 
pened if  the  policy  of  the  Government  in  regard  to  im- 
port duties  had  been  changed  twenty  years  ago,  but  it  is 
clear  to  ni}^  mind  that  if  the  nation  of  the  greatest  produc- 
ing pcrwer  docs  not  hold  i he  keys  of  the  ivorld'  s  conwiercc, 
if  she  does  not  make  European  nations  her  commercial 
tributaries,  the  fault  must  be  her  own.  Precious  time 
has  been  lost  and  immense  sacrifices  have  been  made  to 
build  up  and  sustain  one  great  branch,  of  national  indus- 
\xy,  but  such  are  the  resources  of  the  country  and  the 
energy  of  the  people  that  with  wiser  legislation,  which 
cannot  be  long  delayed,  all  damages  can  be  repaired  and 
general  prosperity  secured.  This  legislation  will  be 
found  in  removing  from  the  tariff  everything  that  stands 
in  the  way  of  international  trade  and  the  adoption  of 
the  needful  means  for  the  restoration  of  our  merchant 
marine. 

With  what  Mr.  Blaine  says  about  the  shipping  inter- 
est of  the  United  States  I  am  in  hearty  accord.  Mr. 
Blaine  says: 

The  failure  of  the  United  States  to  encouraj^e  and  estabhsh 
commercial  lines  of  American  ships  is  in  strange  contrast  with 
the  zealous  efforts  made  to  extend  lines  of  railway  inside  the 
country,  even  to  the  point  of  anticipating  the  real  needs  of 
many  sections.  If  all  the  advances  to  railway  companies,  to- 
gether with  the  outright  gifts  by  towns,  cities,  counties,  vStates, 
and  nation  be  added  together,  the  money  value  could  not  fall 
short  of  a  thousand  millions  of  dollars.  No  effort  seems  too 
great  for  our  people  when  the  interior  of  the  country  is  to  be 
connected  with  the  seaboard;  but  when  the  suggestion  is  made 
to  connect  our  seaboard  with  commercial  cities  of  other  coun- 
tries by  lines  of  steamships,  the  public  mind  is  at  once  disturbed 
by  the  cry  of  "subsidy."  We  really  feel  as  much  afraid  of  pro- 
tection at  sea  as  Mr.  Gladstone  is  of  protection  on  land.  The 
position  of  the  American  Congress  and  the  KngHsh  Parliament 
on  this  subject  are  precisely  reversed.  England  has  never  been 
affrighted  by  the  word  subsidy,  and,  while  we  have  stood  still 
in  impotent  fear,  she  has  taken  possession  of  the  seas  by  the 
judicious  and  even  lavish  interposition  of  pecuniary  aid.  I 
have  already  said  that  the  interest  on  the  amount  which  En- 
gland has  paid  for  this  object  since  she  began  it  with  great 
energy  fifty  years  ago  would  give  all  the  stimulus  needfed  for 
the  rapid  expansion  of  our  commerce.  Let  it  be  added  that  if 
the  Government  of  the  United  vStates  will  for  twenty  years  to 
come  give  merely  the  interest  upon  the  interest,  at  the  rate  of 
five  per  cent.,  on  the  amount  which  has  been  a  free  gift  to  rail- 
roads, every  steamship  line  needed  on  the  Atlantic,  the  Pacific, 


40;") 

and  the  Gulf  will  spring  iulo  existence  within  two  years  from 
the  passage  of  the  act.  It  is  but  a  few  years  since  Congress 
twice  refused  to  give  even  1125,000  per  annum  to  secure  an  ad- 
mirable line  of  steamers  from  New  York  to  the  four  largest 
ports  of  Brazil,  and  the  sum  of  1 125,000  is  but  the  interest 
upon  the  interest  at  five  per  cent,  of  the  gross  amount  freely 
given  to  the  construction  of  railroads  within  the  I'nion.  Is  it 
any  wonder  that  we  have  lost  all  prestige  on  the  sea  ? 

THE   SHIPPING    INTEREST. 

This  failure  has  been  the  result  of  a  want  of  compre- 
hensive  statesmanship  in    Congress.      Fifty   years  ago 
the  United  States  was  second  only  to  Great  Britain  as  a 
maritime  nation;  now  she  is  outstripped  by  nations  that 
were   then  quite    unknown  as  maritime  powers.     The 
deadliest  blow  to  the  shipping  of  the  United  States  was 
in  the  substitution  of  iron  for  wood  in  the   construction 
of  ships.     What  was  left  of  her  foreign  shipping  was  de- 
stroyed in  the  last  civil  war.     Now,  as  no  nation  can  be 
really   great  that  is  dependent  upon  other   nations  for 
ships  to  carry  on  its  foreign   trade,  one   would   suppose 
that  the  restoration  of  our  foreign   shipping  which  had 
been  thus  destroyed  would  long  since  have  received  the 
earnest  attention  of  Congress.     But  session  after  session 
has  passed   away  and  nothing  has  been  accomplished  in 
this  direction,  while  the  difficulties  to  be  overcome  have 
been  steadily  increasing.      It  is  true  that  subsidies  were 
a  few  years  ago  granted  to  American  lines  which  failed 
to  accomplish  the  expected  results,  but  this  should  only 
make  it  certain  that  what  may  be  done   hereafter  shall 
be  done  with  more  circumspection.     The  United  States 
can  certainly  do   what  other  nations  have   successfully 
accomplished  in  a  matter  of  great  national  importance. 
The    indifference   with  which  Western  Congressmen 
and  Western  journals  regard  our  foreign  shipping  inter- 
est may  not  be  surprising,  as  they  are  mainly  interested 
in  the  development  of  their  own  section;  but  it  is  sur- 
prising that  so  little  interest  in  it  is  felt  by  representatives 
from  the  seaboard  States  and  by  the  journals  which  are 
published   in   our  commercial   cities.     The    New   York 
Evening  Post'x^  a  journal  of  large  circulation  and  influence. 
No  man  knows  better  than  its  leading  editor  that  the 
carrying  trade  between  this   country  and    Europe  is  in 


406 


the  hands  of  foreigners  who  are  enriched  by  it.  No  one 
knows  better  than  he  ought  to  know  that  capitahsts  in 
the  United  States  will  not  put  their  money  into  ships  to 
compete  with  long  established  and  subsidized  steamship 
lines  by  which  that  trade  is  controlled  without  Govern- 
ment aid.  No  man  knows  better  than  he  ought  to  know 
that  the  restoration  of  our  foreign  shipping  is  a  matter 
of  great  national  concern,  and  yet  in  reply  to  an  in- 
quiry that  I  made  of  him  he  replied  that  "  the  restora- 
tion of  our  merchant  marine  is  a  matter  of  importance 
to  the  country,  but  only  on  condition  that  it  pays  its  own 
way;  that  the  public  might  as  well  be  taxed  to  revive 
the  agricultural  interests  of  Vermont  as  to  restore  our 
merchant  marine.  Here  is  an  editor  of  a  great  news- 
paper in  the  great  commercial  city  of  the  Union  who 
thinks  that  the  Government  might  as  well  be  taxed  to 
improve  the  agricultural  interests  of  Vermont  as  to  be 
taxed  to  revive  our  foreign  merchant  marine,  the  re- 
vival of  which  would  add  largely  to  the  national  wealth, 
and  is  essential  to  the  well-being  of  the  country,  who 
thinks  tJiat  the  restoration  of  our  mcrclimU  marine  is  of 
importance  to  the  country,  hut  only  on  the  condition  that  it 
pays  its  oivn  way,  its  importance  to  the  country  being  de- 
pendent upon  its  profitableness  to  those  who  are  directly 
interested  in  it. 

Not  so  have  thought  the  great  English  statesmen,  by 
whose  influence  enormous  subsidies  were  granted,  and 
are  still  continued,  to  steamship  lines  between  England 
and  the  United  States.  Not  so  have  thought  the  states- 
men of  other  countries  through  whose  influence  steam- 
ship lines  have  been  established.  The  editor  of  the  Post 
seems  to  think  that  because  the  Norwegians,  who  man  th eir 
own  ships,  and,  consequently,  run  them  at  little  expense, 
can  find  profitable  employment  as  ocean  tramps,  capi- 
talists in  the  United  States  will  run  a  tilt  with  the  Euro- 
pean steamship  lines  that  now  monopolize  the  carrying 
trade  between  the  two  hemispheres.  In  the  face  of  ex- 
isting facts  it  is  strange,  indeed,  that  such  an  opinion 
.should  be  entertained  by  an  intelligent  journalist. 

There  are  very  few  enlightened  men  in  the  United 
States  who  have  carefully  considered  the  subject  who 
do  not  consider  the   restoration  of  our  foreign  shipping 


a  matter  of  great  public  importance,  and  who  do  not  be- 
lieve (so  powerful  are  the  combinations  against  it)  that 
it  will  not  be  restored  without  Government  aid  in  some 
form.  And  there  are,  I  hope,  fewer  still  who  regard  its 
restoration  as  important  onl}-  to  those  who  niuy  be  di- 
rectly interested  in  it. 

No  one,  I  am  sure,  with  American  blood  in  his  veins, 
can  stand  by  the  docks  in  Liverpool,  crowded  with  the 
ships  of  other  nations,  and  without  humiliation  look  in 
vain  for  the  stripes  and  stars. 


LETTER 


TO   THE 

WASHINGTON  POST,    FEBRUARY  19,   1890. 


LETTER 

TO   THE 

WASHINGTON   POST,    FEBRUARY  19,   1890. 


It  has  become  quite  in  order  for  a  part  of  the  public 
press  in  the  United  States,  in  the  exercise  of  what  is  re- 
garded as  its  legitimate  function,  to  bestow  opprobrious 
epithets  upon  those  with  whom  it  differs  in  regard  to 
public  measures.  Thus  many  of  our  leading  journals 
denounce,  as  free  traders  and  tariff  smashers,  all  those 
who,  in  the  interests  of  agriculture  and  of  the  great 
body  of  consumers,  advocate  a  revision  of  the  tariff. 
Others  denounce,  as  subsidy  seekers,  all  those  who  re- 
gard the  restoration  of  our  merchant  marine  as  a  matter 
of  such  national  concern  as  to  make  it  the  dut}^  of  Con- 
gress to  do  what  may  be  needful  in  aid  of  individual  en- 
terprise to  effect  it. 

The  men  who  think  that  the  protective  tariff  stands 
in  the  way  of  international  trade,  which  is  indispensable 
to  the  welfare  of  agriculture,  which  imposes  burdens 
upon  the  many  for  the  benefit  of  the  few,  and  ought, 
therefore,  to  be  carefully  revised,  are  denounced  as  tariff 
smashers.  Those  who  believe  that  the  United  States  can 
never  stand  in  the  front  rank  of  nations  as  long  as  she  is 
dependent  upon  other  nations  for  commercial  facilities; 
who  think  that  the  people  of  the  United  States  should 
at  least  share  in  the  profits  of  ocean  traffic  and  of  wider 
markets,  are  stigmatized  as  subsidy  seekers.  It  seems 
to  be  the  opinion  of  the  managers  of  these  journals  that 
no  one  can  advocate  any  public  measure,  which  for  its 
success  may  depend  upon  Government  aid,  without  be- 
ing influenced  by  sordid  motives,  b}-  unpatriotic  designs 
upon  the  National  Treasury.     I  am  glad  to  say  that  my 


412 

observation,  during  a  long  and  varied  life,  has  led  nie 
to  different  conclusions.  I  do  not  believe  that  patriot- 
ism is  one  of  the  lost  virtues.  Venality  may  abound 
and  corruption  may  be  on  the  increase,  but  I  believe 
that  a  large  majority  of  my  intelligent  countrymen  and 
of  their  representatives  in  public  life  are  patriotic  to  the 
core.  If  this  were  not  my  belief,  I  should  "despair  of 
the  republic." 

I  have,  in  various  ways,  said  all  that  I  had  to  say  upon 
the  tariff.  I  desire  now  to  say,  through  the  Post,  a  few 
words  about  our  shipping  interests. 

Everyone  who  knows  anything  of  the  history  of  the 
country  knows  that  the  United  States,  a  little  more  than 
half  a  century  ago,  was  second  only  to  Great  Britain  in 
traffic  upon  the  seas.  The  building  of  ships  for  Euro- 
pean trade  ceased  when  iron  became  the  substitute  for 
wood  in  their  construction,  and  what  was  left  of  our 
foreign  merchant  marine  at  the  commencement  of  the 
civil  war  was  swept  away  by  Confederate  cruisers. 

In  my  report,  as  vSecretary  of  the  Treasury,  in  1866,  I 
said: 

It  is  a  well-established,  general  fact  that  the  people  who  build 
ships  navigate  them,  and  that  the  nation  which  ceases  to  build 
ships  ceases,  of  consequence,  to  be  a  commercial  and  maritime 
nation.  Unless,  therefore,  the  causes  which  prevent  the  build- 
ing of  ships  in  the  United  States  shall  cease,  the  foreign  carry- 
ing trade,  even  of  our  own  products,  must  be  yielded  to  other 
nations.  To  this  humiliation  and  loss  the  people  of  the  United 
States  ought  not  to  be  subjected.  If  other  branches  of  industry 
are  to  prosper,  if  agriculture  is  to  be  profitable  and  manufac- 
tures are  to  be  extended,  the  commerce  of  the  country  must  be 
restored,  sustained,  and  increased.  The  United  States  will  not 
be  a  first-class  power  among  nations,  nor  will  her  other  indus- 
trial interests  continue  long  to  prosper  as  they  ought,  if  her 
commerce  shall  be  permitted  to  languish. 

This  is  what  I  was  compelled  to  say  in  a  recent  letter 
to  the  New  York  Times,  wdiich  shows  in  a  few  words 
the  humiliations  and  loss  to  which  the  United  vStates  has 
been  suVjjected: 

No  American  who  is  proud  of  his  country  can  suppress  feel- 
ings of  humiliation  when  he  visits  the  London  and  Liverpool 
docks  and  looks  in  vain  for  the  stripes  and  stars.  Every  in- 
habitant of  the  great  republic  who  goes  to  Europe  pays  tribute 
to  foreign  ship-owners.  Every  pound  of  freight  that  crosses 
the  Atlantic  adds  its  might  to  their  gains. 


413 


Was  I  right  in  what  1  said  in  1866  ?  Am  I  right  now 
in  the  opinion  that,  aside  from  all  questions  of  personal 
interests,  the  greatest  producing  country  in  the  world 
ought  not  to  depend  upon  foreign  ships  to  carry  its  sur- 
plus products  to  foreign  markets;  that  it  cannot  be  so 
dependent  without  being  a  tributary  instead  of  a  leader 
among  the  nations  ^ 

If  this  opinion  is  well  founded,  the  restoration  of  our 
foreign  marine  service  is  a  matter  not  of  individual,  but 
of  national  concern,  and  the  practical  question  to  be  con- 
sidered is,  Will  this  restoration  be  effected  without 
financial  aid  from  the  Government  ?  Is  not  this  question 
answered  in  the  negative  by  the  fact  that  nothing  is 
being  done  by  capitalists  in  this  direction  ?  Never  be- 
fore has  capital  been  so  abundant,  never  were  paying 
investments  so  anxiously  sought,  never  was  money  so 
cheap,  and  yet  in  the  ocean  traffic  between  the  New 
World  and  the  Old  the  United  States  has.  no  share. 
Every  year  has  witnessed  the  building  of  new  ships  for 
this  traffic  by  European  capitalists,  while  capitalists  of 
the  United  States  have  looked  on  without  any  disposi- 
tion to  compete  with  them  for  its  profits.  Is  it  not  quite 
certain  that,  unless  the  Government  of  the  United  States 
shall  do  what  has  been  done  by  other  nations,  this  traffic 
will  forever  remain  in  foreign  hands  ?  Is  there  a  man 
with  true  American  blood  in  his  veins  wdio  is  vvilling 
that  this  should  be  the  case  ? 

It  may  be  contended  that  the  building  of  ships  in  the 
United  States  has  ceased,  by  reason  of  import  duties 
upon  the  foreign  materials  which  are  required  for  this 
purpose.  If  these  duties  had  been  removed  when  iron 
became  a  substitute  for  wood  in  the  construction  of  ships, 
our  shipping  interests  might  not  have  beeri  in  their 
present  depressed  condition.  But  the  question  is  not 
now  what  might  have  been  its  condition  in  the  absence 
of  such  duties,  but  would  that  condition  be  improved  by 
their  abrogation  without  aid  from  the  Government? 
Would  the  editors  of  the  journals  who  have  large  bank 
balances,  and  are  in  the  habit  of  denouncing  as  subsidy 
seekers  those  who  think  that  the  foreign  shipping  interest 
is  of  sufficient  importance  to  the  country,  and  to  the 
whole  country,  to  justify  Congress  in  taking  steps  for  its 


414 


restoration — would  these  editors  put  their  money  into 
ships?  I  trow  not.  To  me  it  seems  as  certain  as  any- 
thing in  the  future  can  be  that  ships  will  not  be  built  in 
the  United  States  for  the  European  trade  if  the  duties 
on  foreign  materials,  which  are  needed  in  ship-building, 
are  removed,  unless  something  is  done  by  the  Govern- 
ment to  put  United  States  ships  on  something  like  an 
equality  with  European  ships.  Capitalists  in  the  United 
States  wnll  never  enter  into  competition  for  the  ocean 
traffic  with  foreign  capitalists,  unless  the  competition 
can  be  a  fair  one.  The  risk  to  be  incurred  in  competing 
with  subsidized  lines  would  be  too  great  to  be  en- 
countered. 

What  foreign  nations  have  done,  what  they  are  now 
doing  to  create  and  sustain  business  upon  the  seas,  and 
to  find  markets  for  their  productions,  has  been  shown 
by  Mr.  H.  K.  Thurber,  in  the  December  number  of 
Belford' s  Magazine;  by  Mr.  Blaine,  in  the  NortJi  Ameri- 
can; by  Henry  W.  Raymond,  Secretary  Tracy's  confi- 
dential assistant,  and  still  more  fully  by  Secretary  Win- 
don,  in  his  recent  very  able  report.  The  enormous  sub- 
sidies which  have  been  granted  by  these  nations  to  their 
steamship  lines  have  been  granted  not  only  for  the 
profits  of  ocean  traffic,  but  also  for  the  purpose  of  find- 
ing markets  for  their  surplus  products.  Great  Britain, 
which  has  done  more  in  subsiding  steamship  lines  than 
any  other  nation,  has  been  many  times  overpaid  for  her 
outlays  by  the  markets  which  have  been  thus  obtained 
for  her  manufactured  goods.  How  can  new  markets  be 
obtained  by  the  United  States  for  her  surplus  productions 
as  long  as  she  is  dependent  upon  foreign  ships  for  trans- 
portation ?  There  can  be  no  reasonable  doubt  that  if 
the  American  Congress  had  been  governed  by  as  wise 
counsels  as  have  governed  the  British  Parliament,  the 
United  States  would,  ere  this,  have  been  in  the  enjoy- 
ment of  a  full  share  of  the  ocean  traffic  and  of  the 
markets  from  which  they  are  now  practically  excluded. 
So  important  do  I  regard,  for  the  prosperity  of  the 
country,  the  restoration  of  our  foreign  shipping  interests, 
that  if  I  were  a  member  of  Congress,  I  would  vote  for 
any  measure  which,  upon  careful  consideration,  I  might 
consider  necessary  to  revive  and  sustain  it;   I  should 


415 


not  be  deterred  by  the  outcry  against  subsidies.  So  far 
from  it,  if  I  had  been  among  those  who  had  voted  for 
millions  upon  millions  of  dollars  for  the  construction  of 
railroads,  to  bring  the  productions  of  the  interior  to  the 
seaboard,  I  should  be  ashamed  to  face  my  constituents 
if  I  had  failed  to  do  what  I  could  towards  securing  the 
transportation  of  the  surplus  to  foreign  lands  in  United 
States  ships.  Mr.  Blaine,  in  the  article  to  which  I  re- 
ferred, after  speaking  of  the  enormous  subsidies  which 
have  been  granted  to  foreign  steamship  lines,  expresses 
confidently  the  opinion  that  the  interest  upon  the  inter- 
est, at  five  percent.,  of  what  has  been  given  to  railroads, 
would  be  sufficient  to  put  the  United  States  again  in  the 
front  rank  of  maritime  nations.  If  this  opinion  is  cor- 
rect, who  can  be  doubtful  in  regard  to  what  should  be 
the  action  of  Congress  at  the  present  session  upon  this 
great  national  question  ?  It  is  a  question  that  cannot  be 
dwarfed  by  the  outcry  against  subsidies;  nor  can  the 
careful  consideration  of  it  be  deferred,  without  serious 
and  constantly  increasing  loss  to  the  country. 


LETTER 

To    THE 

NEW  YORK  INDEPENDENT. 


LETTER 

To    THE 

NEW  YORK  INDEPENDENT. 


In  closing  these  papers  I  call  to  mind  nothing  that  I 
have  written  which  would  be  more  appropriate  than  the 
following  letter,  which  I  wrote  for  the  New  York  Inde- 
pendent, in  April,  1889,  upon  the  character  of 

GEORGE   WASHINGTON. 

No  name  is  so  conspicuous  in  the  world's  history  as 
that  of  George  Washington.  Of  no  other  man  has  it 
been  literally  true  that  he  was  "first  in  war,  first  in  peace, 
and  first  in  the  hearts  of  his  countrymen."  Strong  and 
striking  as  was  this  condensed  eulogy,  it  w^as  not  exagger- 
atory. Brave  without  rashness,  ambitious  without  self- 
ishness, firm  without  arrogance,  self-confident  without 
egotism,  religious  without  bigotry,  loved  and  honored 
without  courting  popular  favor,  quick  and  clear  in  con- 
ception and  sound  in  judgment,  he  possessed  in  an  emi- 
nent degree  the  qualities  that  fitted  him  for  the  duties 
he  was  called  upon  to  perform  in  the  field,  in  the  public 
councils,  and  in  the  formation  and  establishment  of  a 
government  of  which,  in  many  respects,  there  was  no  ex- 
ample. He  was  one  of  the  few  distinguished  men  whose 
private  as  well  as  public  life  has  borne  the  strictest  scru- 
tiny, whose  military  discipline  did  not  disqualify  him  for 
the  arts  of  peace;  the  only  man  whose  name  is  honored 
in  all  civilized  countries,  and  whose  renown  has  increased 
as  years  have  rolled  on.  It  is  not  strange,  therefore, 
that  many  of  his  countrymen  believe  that  he  was  espe- 
cially created  for  the  execution  of  the  purposes  of  Provi- 
dence in  regard  to  the  great  republic. 

When  it  became  manifest  that  the  rights  of  the  colo- 
nies could  not  be  maintained  without  war,  the  eyes  of 


420 

the  people  turned  to  Washington  as  a  leader.  He  had 
given  evidence  of  his  valor  and  skill  in  the  Indian  wars. 
He  was  better  known  as  a  soldier  throughout  the  colo- 
nies than  any  other  man,  and  his  appointment  by  Con- 
gress to  be  the  commander-in-chief  of  the  Continental 
forces  was  in  obedience  to  the  public  will.  The  outlook 
at  the  commencement  of  hostilities  was  discouraging  in 
the  extreme.  There  was  a  lack  of  unity  of  sentiment 
among  the  colonies  in  regard  to  the  object  to  be  achieved. 
There  was  no  public  Treasury — no  central  authority.  The 
regiments  furnished  by  the  colonies  were  composed  of 
brave  and  hardy  men,  but  they  were  without  discipline 
and  their  terms  of  service  were  too  short  for  the  acquire- 
ment of  the  habits  of  regulars;  and  what  was  still  more 
unfortunate,  their  officers  were  destitute  of  military 
training.  These  serious  drawbacks  upon  the  efficiency 
of  the  regiments  added  enormously  to  the  labors  and  re- 
sponsibilities of  the  chief;  but  they  did  not  discourage 
him.  On  the  contrary,  they  developed  his  own  energy 
and  gave  to  him  a  deep  hold  upon  the  confidence  and 
trust  of  the  people. 

If  Washington  did  not  possess  the  genius  of  an  Alexan- 
der, Napoleon  or  even  a  Wellington,  no  general  ever  sur- 
passed him  in  the  courage,  the  patience,  the  endurance, 
the  wisdom  which  were  needed  for  the  accomplishment  of 
grand  results,  by  what  seemed  to  be  utterly  inadequate 
means.  He  was  not  magnetic.  He  did  not  excite  the  en- 
thusiasm of  the  soldiers,  but  their  faith  in  him  and  devo- 
tion to  him  was  of  the  highest  and  heartiest  character — 
faith  and  devotion  which  were  as  strong  in  the  severe 
disasters  on  Long  Island  and  in  the  terrible  sufferings  at 
Valley  Forge  as  in  the  consummation  of  their  hopes  at 
Yorktown.  The  duties  of  Washington,  upon  whom  the 
conduct  of  the  war  had  been  devolved  as  commander- 
in-chief,  were  to  give  direction  to  the  colonial  forces  in 
all  parts  of  the  extensive  field  over  which  hostilities  ex- 
tended; to  keep  up  the  spirits  of  the  soldiers,  and  to  pro- 
long the  contest,  no  matter  how  disheartening  the  pros- 
pect might  be,  until  the  independence  of  the  colonies 
had  been  achieved.  These  duties  he  performed  with  ex- 
traordinary ability.  Unsupported,  and  in  some  instances 
opposed  by  Congress,  with  subordinates  jealous  of  his 


421 

fame,  if  not  hostile  to  him  personal!}-,  he  made  such  uses 
of  the  inferior  forces  under  his  general  command  that  the 
victories  of  the  British  gave  to  them  no  enduring  advan- 
tages. Under  discouragements  which  would  have  driven 
any  other  general  to  despair,  he  maintained  his  confi- 
dence in  himself  and  his  sublime  faith  in  the  justice  of 
the  cause  which  he  regarded  as  being  too  precious  to  be 
lost.  But  while  his  duties  as  commander-in-chief  were 
mainly  supervisor}^  and  director}-,  there  were  occasions 
when  he  exhibited  daring,  hardihood,  and  prowess  that 
proved  him  to  be  equal  to  any  emergency,  able  to  inspire 
his  troops  with  his  own  indomitable  will.  The  most  con- 
spicuous of  these  was  the  crossing  of  the  Delaware,  a  feat 
that  commanded  the  admiration  of  the  enemy,  followed 
by  the  battle  of  Trenton,  which  in  itself  and  its  conse- 
quences was  the  most  important  battle  of  the  war. 

Of  the  merits  of  a  general,  none  are  such  competent 
judges  as  the  officers  and  soldiers  who  have  been  subject 
to  his  command.  Of  the  merits  of  Washington  as  com- 
mander-in-chief, there  could  be  none  whose  judgment 
would  be  entitled  to  respect  equal  to  that  of  the  officers 
and  soldiers  whose  devotion  to  him  never  faltered 
through  the  vicissitudes  of  the  protracted  war.  In 
their  judgment,  from  which,  at  the  close  of  the  war, 
there  was  no  dissent,  Washington  was  entitled  to  very 
high  rank  among  the  great  generals  of  the  world. 

But  distinguished  as  Washington  was  as  a  general,  he 
was  still  more  distinguished  as  a  civilian.  Scarcely  had 
the  independence  of  the  colonies  been  achieved  than  he 
perceived  the  absolute  necessity  of  their  being  united 
under  a  central  government,  which,  without  depriving 
them  of  control  in  all  local  matters,  should  have  power 
to  levy  and  collect  taxes  for  its  own  support  and  the 
payment  of  the  public  debt;  to  coin  money  and  fix  a 
value  upon  foreign  coins  ;|to  regulate  domestic  and  foreign 
trade;  and  to  transact  all  business  of  an  international 
character — a  government  of  limited  powers,  but  absolute 
in  the  exercise  of  its  delegated  authority.  Of  the  con- 
vention which  was  called  to  form  such  a  government, 
composed  of  the  ablest  men  that  were  ever  assembled  in 
council,  he  was  unanimously  elected  president.  In  the 
able  debates  of  the  convention  he  did  not  often  partici- 


422 


pate,  but  no  member  better  understood  what  was  wanted 
to  make  the  colonies  a  nation,  and  to  no  one  are  the 
country  and  the  world  so  greatl}'  indebted  as  to  him  for 
the  work  w^hich  was  accomplished — the  Constitution  of 
the  United  States,  the  noblest  product  of  human  wisdom  ; 
and  when  the  Government  was  to  be  put  in  operation 
there  was  but  one  man  to  whom  the  people  looked  to  fill 
the  highest  place.  The  latter  part  of  the  eighteenth  and 
the  early  part  of  the  present  century  were  prolific  of 
great  men,  and  this  was  especially  true  of  the  United 
States.  Where  and  when  in  the  world's  history  were 
there  such  men  as  Benjamin  Franklin,  who,  commencing 
life  as  a  humble  printer,  became  renowned  throughout 
the  world  for  his  scientific  discoveries  and  practical  wis- 
dom; Alexander  Hamilton,  whose  genius  was  like  in- 
spiration, whose  reports  as  the  first  Secretary  of  the 
Treasury  upon  taxation,  upon  manufactures  and  the 
public  debt  covered  his  name  with  immortal  honor — re- 
ports so  clear  in  expression,  so  sound  in  doctrine,  so 
honorable  in  sentiment,  so  profound  in  thought  that 
financiers  and  economists  of  the  present  day  turn  to 
them  for  guidance  and  instruction;  John  Jay,  the 
learned  jurist  and  skilful  diplomatist,  of  whom  Mr. 
Webster  said  that  "when  the  ermine  of  Chief  Justice 
fell  upon  his  shoulders  it  fell  upon  nothing  less  pure  than 
itself;  John  Marshall,  the  ablest  judge  that  ever  adorned 
the  bench  of  this  country  or  any  other,  the  great  inter- 
preter of  the  Constitution  and  of  the  principles  of  the 
common  law — the  law  of  human  rights — whose  decisions, 
numerous  as  they  were  upon  a  great  variety  of  subjects, 
although  in  some  instances  undermined,  have  never  been 
overruled;  John  Adams,  who,  while  wanting  in  political 
sagacity,  was  second  to  none  in  patriotic  ardor  and  men- 
tal power;  Thomas  Jefferson,  the  philosophic  statesman 
and  elegant  writer,  the  careful  student  of  the  laws  of 
nations,  whose  democracy,  imbued  as  it  was  with  the 
spirit  of  the  French  school,  was  needed  as  an  offset  to 
the  federalism  of  some  of  his  associates;  James  Madison, 
one  of  the  most  accomplished  and  effective  of  writers 
and  wisest  of  thinkers;  Charles  Cotesworth  Pinckney, 
the  brilliant  speaker,  the  able  and  fearless  Minister  to 
France    in    1796,  who_,  when  money  was  demanded   of 


428 


him  by  Talleyrand  as  a  condition  of  peace  between 
France  and  the  United  States,  met  the  demand  by  the 
exclamation,  "Millions  for  defense,  not  a  cent  for  trib- 
ute;" Rufus  King,  Fisher  Ames,  Luther  Martin,  Robert 
Morris,  Charles  O.  Pickering,  Roger  Sherman,  Oliver 
KUsworth,  Edmund  Randolph,  William  Livingston?  Of 
these  and  a  score  of  others  scarcely  less  eminent,  whose 
equals  as  a  body  may  be  looked  for  in  vain  in  the  na- 
tional history,  Washington  was  the  acknowledged  leader. 
Inferior  in  some  respects  to  many  of  them,  there  was  in 
him  a  combination  of  high  qualities  that  no  other  man 
possessed.  To  be  the  leader  of  such  men,  and  to  be 
called  upon  by  general  consent  to  fill  the  first  place 
in  the  new  Government,  was  an  honor  of  the  very  high- 
est character.  Of  the  manner  in  which  he  filled  that 
high  place,  of  the  example  which  he  set  before  his 
countrymen  and  the  people  of  other  nations,  history  has 
spoken  in  no  uncertain  terms.  Like  the  monument 
erected  to  his  honor  in  the  city  that  bears  his  name,  his 
character  stands  out  in  the  world's  roll  of  noble  men,  no 
less  distinguished  by  its  simplicity  than  by  its  majesty 
and  strength.  His  name,  now  honored  wherever  his- 
tory is  known,  will  continue  to  be  honored  as  long  as 
unselfish  patriotism,  lofty  endeavor  and  spotless  in- 
tegrity are  honored  by  mankind. 


INDEX. 


Adams,  John s 422 

Alabama  treaty,  greatest  achievement  of  this  century 65 

Allen,  Governor 136,  154,  177 

American  citizens  pay  tribute  to  foreign  ship-owners 412 

colonies 21,  262 

flag 31 

not  seen  in  English  docks 381 

labor  does  not  need  protection 86 

resources 86 

Armies  of  European  States 106 

Army  of  the  Revolution 420 


Bank,  The  Scotch 164 

of  North  America 263 

United  States 263,  267,  395 

Examiners 358 

Pennsylvania  U.  S.,  chartered 395 

Banking  should  be  free 78 

The  best  system  now  in  use 77 

Objections  to  national  system  considered 275 

National  system  should  be  sustained 352 

system  approved  by  business  men 359 

from  1830  to  1837 266 

Bank-notes  advocated  instead  of  United  States  notes. .  .75,     77 

Circulation  of 152 

Direct  issue   of,    by   Colonies   and    Confederate 

States 181 

Result  of  withdrawal  of  national .  , 361 

Bankrupt  nations 299 

Banks,  Congress  has  authority  to  incorporate 281 

National 165,  207,  280 

circulation  secured  only  by  United  States 

bonds 359 

able  to  furnish  all  paper  money 279 

New  York,  Boston,  and  Philadelphia,  suspend 270 

not  dangerous  to  people 277 

opposed  by  politicians  of  the  "tear-down"  school. .    163 

Our  system  of 167,  180,  272,  276,  357 

State 165,  307 

Suspension  of  1861 273 

Well-managed,  conducive  to  public  prosperity 280 

Beecher's  discovery 169 


420 


Bi-metallic  money 210,  239 

Use  of  it  urged 253 

Hamilton  on 362 

standard 245 

Bismarck  opposes  inflation 181 

Blaine  on  tariff 387,  401 

shipping  interests  of  the  I'nited  vStates 404,  415 

Business,    how  revolutionized     , 336 

running  into  fewer  hands 341 

C 

Calhoun,  the  great  nullifier 24 

Calomel,  "  Too  much  " 153 

Capital  and  labor 332,  348 

Capitalists  should  be  content  with  small  profits 214 

Chase,  Secretary 27 1 

author  of  national  banking  system 166 

instrumental  in  successful  termination  of 

war 79 

Childs,  George  W.,  on  taxation 318 

Christiancy,  on  South  American  trade 326 

Civil  war.  Magnitude  of  our 150 

Results  depended  as  much  on  money  as  armies.  124 
A  contest  between  the  civilization  of  barbarism 

and  the  civilization  of  freedom 216 

Cobden,  Richard 59 

Coin,  Adulteration  of 172 

Congress  can  not  give  fictitious  value  to 172 

has  power  to  make 225 

How  weighed  in  Great  Britain 227 

in  Kurope 178 

No  Government  can  give  fictitious  value  to 225 

Value  depends  on  quantity  of  pure  metal,  etc 235 

When  exported 226 

Coinage  acts  1792  to  187S 239,  242 

Colored  people  of  the  vSouth  as  voters 217,  345 

citizens 217 

could  control  three  States 370 

labor  indispensable 52,  347 

people  must  be  protected  in  political  rights 346 

Sympathy  for,  wrongly  directed  by  politics .  345 

unfitted  for  governing 370 

Commerce  of  the  world . .    252 

Communism 211,  349 

Congress  has  authority  to  make  coin 225 

incorporate  banks 281 

Continental  money 173 

soldiers 420 

Constitutional  convention 421 

Corporations  should  be  controlled  by  the  Government 353 

Cotton,  American,  bought  b}^  Great  Britain 377 


427 


Currency 69,  82 

Exclusively  metal,  impracticable 49,  71 

Fluctuation  of 160 

House  of  Representatives  favors  contraction  of.  .  139 

Irredeemable,  produces  and  perpetuates  poverty  72 

a  false  standard 228 

Making,  should    not    be    entrusted    to    political 

parties 74,  78 

Paper 49 

advances  prices 230 

Increase  of  paper,  unwise ...  231 

Paper,  never  a  deficiency  of 351 

Of  what  should  paper,  consist 360 

A  sound,  life-blood  of  a  commercial  people 72 

Redundant  and  vicious 151,  192,  204 

vSniall  notes  should  be  withdrawn ." 352 

"  Shrinkage  "  will  not  affect  real  values 75 

Secretary-  Sherman  on  paper  money 2S7 

bill,  Grant's  veto  of 177 


Defaulting  vStates  an  impediment  to  national  credit 109 

Democratic  convention  at  Indianapolis 80 

party  opposed  to  paper  money 135 

record  on  financial  questions 80 

Dependence  of  old  and  new  worlds.  Mutual 200 

Depew  on  condition  of  country 401 

Detroit  convention 184 

favors  boundless  expansion 185 

Disturbance,  General,  due  to  local  causes 337 

Dollars  of  the  fathers 240 

Douglas,  Fred.,  on  Southern  exodus 347 

vStephen  A 19 


Economy 16S 

Elections   in    the   South,  Federal    interference   in,  depre- 
cated    369,  370 

F^lectric  telegraph 336 

F^mancipation  of  slaves 294 

Emerson,  Ralph  W.,  on  political  parties 367 

England,  a  free  country 57 

prosperity .• 181 

threatened  with  invasion 182 

the  first  to  put  steam  engine  into  practical  use.  .  .    182 

saved  in  Napoleonic  w^ar  by  steam  engine 182 

English  corn  law 87 

Englishmen  tolerate  insolvency,  but  not  repudiation 119 

"Eternal  vigilance  the  price  of  liberty  "' 278 

F^uropean  national  debts 102 

Evarts  on  Minnesota  bonds n,K 


428 


Exchange,  Domestic 306 

Exodus  from  the  South 346 

Expansion  of  1835  and  1836 397 

Experience,  The  lesson  of 180,  215,  224 

Export  of  cotton  goods  (note) 304 

Extravagance ■ 153 

F 

Farming  by  machinery 212 

"  Financial  troubles  promote  Godliness  " 221 

questions  should  not  be  party  questions 353 

Foreign  coin  a  legal  tender 226 

exchange 296 

vote  as  dangerous  as  colored  vote 370 

Fort  Wayne,  her  future  greatness 51 

advantages 52 

Settlement  of 40 

ill  1833 40 

Financial  standing  of 51 

France,  a  borrower 232 

Condition  at  close  of  Franco-Prussian  war 92 

Enormous  war  debt  paid  in  less  than  two  years. . .     93 

Financial  prosperity  of 93.  99>  248 

Good  name  of 98,  100 

Immense  standing  army  of. 106 

Industries  of 33^ 

Land  tenure  of 338 

Public  debt  of 103,  105,  234 

Recuperative  power  of 94 

should  excel  in  arts  of  peace,  not  war 107 

disband  her  army 107 

Franklin,  Benjamin   422 

French  people  the  most  thrifty  and  industrious 95 

the  most  tasteful  in  the  world. 97 

G 

Garrett,  John  W.,  sues  Wabash  and  Erie  canal 131 

Germany  free  from  debt 102 

more  than  a  match  for  France  in  war 107 

not  a  wealthy  nation 248 

' '  Give  her  a  lick  back  " 364 

Gladstone 65 

on  debts 254 

tariff 387 

His  views  on  double  standard  opposed  by  Ham- 
ilton    257 

Gold  and  silver  a  double  standard 242 

decreasing  in  value 230 

flow  from  debtor  to  creditor  nation 232 

important  in  indicating  course  of  trade .  236,  237 

only  true  measures  of  value 49,  137,  239 

Preventive  in  fluctuations  in  value  of 258 


42\) 

Gold  and  silver  regulators  of  trade   231 

the  only  real  money 235 

universal,  but  not  unchanging  value 228 

demonetized 205,  249 

Grant's  veto  of  currency  bill  favorably  received .\    177 

Goods  manufactured  in  United  States  as  cheap  as  elsewhere  378 

Granger  organization 341^  342 

Great  Britain 2oo|  305 

a  loser  of  gold 232 

Capital  not  taxed  in 315 

Debt  of 310 

Iron  and  coal  in 377 

Lands  in ^37 

Manufactures  of 149 

not  a  popular  government 339 

Paper    money    of,    compared    with   that     of 

America 179 

Parliament  regulates  traffic  charges 342 

Greenback  party 206 

Groesbeck,  Mr 177 

Gwin,  Dr 212 

H 

Hamilton,  Alexander 257,  262,  263,  361,  422 

Harvard  University 354 

Hayes,  President,  a  hard-money  man 193 

Heresies  to  be  exploded 223 

Holland  demonetized  gold • 249 

Honesty  is  the  best  policy 223 

Honor  paid  to  ex-Confederates 217 

Hunger  for  bread  not  among  the  beatitudes 214 


Immigration ,  Foreign 369 

to  the  West 212 

India  suffers  from  change  of  money  standard 249 

Indiana  blocks  the  way  of  American  credit 133 

State  debt 1 1 1  ^   130 

Inflation,  Bismarck  opposes 181 

most  dangerous  to  public  morals 50,   138 

No  remedy ^ .  .    i^s 

Inventions  disturb  old  economic  laws 148 

Iron  and  coal  in  Great  Britain 377 

mills  in  Massachusetts 377 

trade ; 158 


Jackson,  Andrew i^ 

Letter  of,  about  Governor  Polk  and  the 

tariff 383 

removes  deposits  from  national  bank 264 


430 


Jay,   John  422 

Japan,  a  borrower  in  London 104 

Jefferson,   Thomas •• 422 

Johnson,  Andrew,  Administration  of 191 

Character   of 44,   143 

Mistakes  of 48 

Tribute  to 13,     23 

K 

Kemper,  Governor 133 


Labor,  The  question  of 210 

Causes  prejudicial  to 340 

degraded   by   slavery 216 

in  America  and  Europe  compared 86,  375 

the    United  vStates,   especially    in  the    Southern 

States 52 

The  great  source  of  national  wealth 204 

and  capital 348 

Laboring  classes  of  Great  Britain 213 

Land,  how  made  valuable 316 

Law  in  finance 236 

when  constitutional 283 

Legal-tender  acts 117,   123,  125,  238 

Secretar}'  of  the  Treasury  on 127,  128 

Decision  of  the  Supreme  Court  on 359 

Club,    Phillips'   letter   to .* 178 

notes 127,   142,    147,  171 

Danger  of  Congress  issuing,  not  yet  re- 
alized    137 

Gen.  Butler  advocates  further  issue  of.  .  173 

not  to  take  precedence  of  bank-notes.  .  174 

popular    360 

should  be  convertible  into  four  per  cent. 

bonds  175 

Withdrawal  of,  recommended..  139,  174,  205 

Letters  of  credit 303 

Lincoln,  Character  and  habits  of 42 

Death  of 41 

Election  of 29 

M 

Machinery,  Labor-saving 212,  336 

Madison,  James  422 

Manufacturers 149 

Wealth  of  country  increased  by 374 

Markets,  shutting  the  world's  379 

Marshall,  John  422 

Massachusetts  iron  mills -xn-j 


431 

Massachusetts  leads  in  use  of  paper  currency 261 

vState  debts  paid  in  coin 123 

McCullougli,  vSecretary  of  the  Treasury,  asked  Congress  to 

retain   legal-tender  notes 176 

denounced i57.    ^7^ 

goes  to  Washington  to  organize  national  ban- 

ing   system 166 

on  depreciated  currency 159 

precious  metals I59 

public  debt 295 

McLean,  Justice,  on  State  contracts •    120 

Merchant  marine,  Decline  of i4^S,  412 

necessary  to  our  prosperity 414 

Minnesota  repudiation i34 

Money,  Definition  of 224 

Full  volumes  required 203 

Lecture  on 221 

made  by  the  printing  press 237 

plentiful 203 

Napoleon  on  importance  of 124 

necessary  to  the  preservation  of  the  Union 222 

non-exportable ^^3 

remitted  by  telegraph 301 

The  representatives  of 259 

Monopolies 342 

Morality  gauged  by  statutes 222 

Municipal  bonds 312 

N 

Napoleon  on  the  importance  of  money  in  warfare 124 

National  debts io3,  235,  289 

New  England ^9^ 

North  united ^9^     3i 

O 

Ohio  Democratic   convention  favors  issue  of  legal-tender 

notes 135 

on  five-twenty  bonds 128 

P 

Panic  in  Wall  street  apprehended 140 

1857 ^9^ 

1873 142,  399 

Parties,  The  two  great. 367,  3^8 

favor  tariff  for  revenue 309 

Pauper  labor • ^ 

Pendleton's  issue  in  Indiana ;"  ■••:■:■ q2 

Pennsylvania,  an  empire,  does  not  need  protection 86 

Personal  property 3^3 


432 


Phillips'  letter  to  Legal  Tender  Club 178 

Pinckney,  Charles  Cotesworth 422 

Politics,  a  great  absorbent 344 

Disturbing  power  of 345 

Political   economy 320 

Press,  heaps  opprobrium  upon  opponents 411 

Production  exceeds  consumption 335 

Professional  politicians 216 

Property  should  be  represented  at  the  polls 215 

Prosperity  engendered  by  war,  Delusive 151 

Protective  tariff  injurious  and  unnecessary 85 

Public  debt  indicates  standing  of  a  nation .' 234 

R 

Railroads— Union  Pacific  and  Central  Pacific  monopolies. .  343 

Ratio  of  gold  and  silver 241,  242 

Reconstruction  in  the  South 45 

Rents  in  Washington 401 

Repudiation 125 

Reverses  of  1817  and  1837 393 

Ripon,  Marquis 60 

S 

Scott,  Dred,  decision 28 

Gen.  Wellington's  estimate  of 34 

Secession  is  revolution 24,     25 

madness  and  treason 26 

rebellion,  not  treason.     (Note  dated  1890.) 35 

Shakespeare,  the  world's  poet 58 

Shipping  interests  of  United  States 405,  413 

Blaine   on 404 

Foreign " 413 

vShips. — Iron  superior  to  wooden,  etc 336 

Sherman,  Secretary  of  Treasurj^  on  paper  money 287 

Silver. — Act  of  1878 251 

Alarm  about  excessive  production  groundless. . . .   254 

Average  price  in  London 244 

Degradation,  how  caused 245 

will  disappear.' 247 

Demonetization  by  German  Empire 245 

Circulation  should  be  limited 252 

Coinage  limited 246 

Commission  a  failure 259 

P^uropean  nations  wish  advance  in  value 210 

No  longer  standard  of  value 209 

vSocialism 349 

South  American  trade,  Christiancy  on 326 

is  with  Europe 380 

Our  relations  with 324,  380 

Specie  circular 267 

payment 49,  70,  77,  146 


433 


Specie  standard ••147,  238 

Speculation 203 

Speculative  mania,  Results  of 395 

Spinner,  Treasurer,  instructed  to  prevent  panic 140 

Stagnation  of  industry 148 

State  allegiance 217 

contracts,  Opinion  of  Justice  McLean  on 120 

debts    in   United   States    paid    in    depreciated    cur- 
rency  117,  132 

sovereignty 41,    47,  360 

States  cannot  be  forced  to  keep  obligations .  121 

Stevens,  Thaddeus,  on  government  loans 126 

Suffrage,    Universal 339 

Surplus  in  Treasury 269 

Suez  canal 336 

T 

Tariff,  a  commission  should  be  organized 83 

Blaine  on 387,  401 

Discriminating  duties  advantageous 322 

does  not  lower  prices 376 

for  protection,  supported  by  Republicans 368,  369 

revenue,  favored  by  both  parties 368 

only,  favored  by  Democrats 369 

supported  by  Whigs 368 

Gladstone  on 387 

Grounds  of  defence  for 373 

hostile  to  farming  interests 3/9 

in  Great  Britain,  for  revenue  only 323 

on  blankets • 329,  372 

copper 330,  373 

quinine 328,  378 

salt. 328,  372 

steel  rails 329.  373 

woolen  goods,  why  claimed 378 

hostile  to  our  merchant  marine 381 

protection  no  longer  needed 371,  376 

Protective,  is  barbarism 85 

class  legislation 376,  379 

Sectional  differences  on,  disappearing 319 

should  be  for  revenue,  not  for  protection 82 

revised 353 

have  been  revised  at  close  of  war 372 

The  North  favors,  and  protective  duties 319 

South  favors,  for  revenue  only 319 

War 327 

Why  free  trade  is  impossible 391 

Taxation,  Federal 33i 

Geo.  W.  Childs  on 318 

Intagible  property  should  not  be  taxed 316 

Indirect,  expensive,  and  demoralizing 83 


434 


Taxation  in  New  York 317 

of  personal  property 315,  317 

State,  city,  and  county 390 

War 310 

Thanksgiving  Day,  its  origin  and  celebration 64 

Transportation  East  and  West  controlled  by  four  men. . . .   342 

Treasury,  Secretaries,  under  Jackson 365 

Trouble,  soon  forgotten 238 

of  one  nation  felt  by  others 2^0 

U 

Ultra  men  on  both  sides 28 

Union  necessary  to  American  colonies 22,  23,     24 

of  the  States  secure 216 

The,  preserved  by  Providence 32 

"  saved  by  faith  " 124 

United  States  as  a  manufacturing  country 321 

army  no  larger  than  London  police  force. ...   1 18 

disbanded  at  close  of  war 107,  117 

Bank 263,  267.  395 

credit  should  be  exceptionally  high 108 

impaired  by  default  of  States.  109,  117,   119 

condition  in  i860  and  1861 16,  17,  18,   19 

1890 400 

Debts  between,  and  European  nations 233 

debt  being  constantly  diminished ...  100,  109,   118 

creditably  managed 235 

should  be  extinguished  as  soon  as  prac- 
ticable    359 

finances  in  1865 50 

has  no  standing  army 107,  118 

owes  gratitude  to  Germany  and  Holland. ...    124 

prosperity  depends  on  commerce 412 

relation  to  South  American  countries. .  .  .324,  380 

unusual  powers  of  corporations 341 

war  debt loi,   190 

will  be  the  richest  nation  on  earth 108 

bonds.  Acts  of  Congress  i863-'4  made  payable 

in  coin 125 

exempt  from  taxation 314 

five-twenties  should  be  paid  in  coin. .    124 

Holders' of,  objects  of  contumely 154 

regarded  as  patriots 155 

issued  to  fund  Treasury  notes 126 

Income  from  four  per-cent 315 

Mr.  Kelly  favors  low  rate  of  interest 

on 162 

Mr.  Sherman  proposed  issue  of  con- 
vertible      161 

Pennsylvania  farmer  on 156 

should  not  be  paid  in  greenbacks.  .81,  124 


4?yl 


United  States  bonds  sold  in  Europe 300 

Government  favorable  to  Southern  interests     27 
interested  in  value  of  silver  .  . .   251 

not  a  failure 27,     34 

against  Southern  interests.     27 
money,  Specie  and  convertible  notes  the  only 

reliable 49,  70,     77 

notes.  Irredeemable,  mean  depreciation 146 

objected  to ...   283 

Republicans  and  Democrats  favor.  . . .  367 

should  be  convertible  into  bonds 175 

cease  to  be  legal  tender  .  . .  .71,  350 
Webster  on 367 


Value,  True  measure  of 49,  137,  170,  239 

Values  in  Great  Britain  and  United  States  compared 229 

are  not  prices 229 

Virginia,  the  pet  colony  of  England 1 14 

State  debt 114,   121 

funding  act 1 14 

Kind  sentiments  of 133 

W 

Wabash  and  Erie  Canal  bonds in,   130 

Wages  higher  in  United  States  than  in  Europe 375 

will  go  down  unless  immigration  is  checked 375 

Washington  approved  United  States  National  Bank    .  . 282 

George,  Character  of 419,  420,  421,  422,  423 

Battles  of 420,  42 1 

Companions  of 422,  423 

City 198 

Webster,  Daniel,  on  legal  tender 367,  136,  208 

Wells,  David  A. ,  on  our  importations 327 

West — the  products  always  bring  their  value 77 

Whig  party 3^7 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW 


AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  SO  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.00  ON  THE  SEVENTH  DAY 
OVERDUE. 


NOV  15  1937 


i-'CT 


^4  inj 


';;;■'•    2?,  ta4 


oersa  imp 


NOV    1   19 


15Ncy'62JW 


NOV  ]  3  1962 


(yjiPxlA^^ 


r 

NOV  a 


^C.A--"vy^ 


4 


-t^ 


Mm — 6  1946 


^Pg  i>    l^t 


4]uxia2B,tt 


v'Uiv^      '^5u 


y 


20Jur5: 


)55l^ 


LD  21-95w-7,'37 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


1-5 


:■^•^\■;■^■;■:v^=•■^^•-^■?>^V■w•^vA■•i^v>',V•'-fa 


•y'/'-^^ 

:'.'.. 

•i-'J'i-j 

)iy^«^ 

■  \  ;'■•'•' 'Y^' 

■^i#' 

%^iJMl 

.':'•  .';iV>' 

W;.'^'. 

•V;||f 

1;  •) 

Ili 

V-.'' 

^OM 

:^''^^^ 

'••I'/f^jI'.k 

■/i'/'vi 

.';■.    ■    " 

'■'t'H'i 

^■;^;f!;:^l 

:-'■:'■»: 

^;>^>,';y,":"i 

■iv^/H/ 

^J 

^^;§; 

'•;'• 

'.'•'•i;','/ 

?'U'ri'^;^ 

Ki'/.li:; 

y> 

/^t;!s" 

:j>'l^j'^ 

!;•{.' ■i-*4'>' 

.'''.','•  ,'.'•',', 

•^. 

;;;•,!' 

Si 

.',"' 

■;^^^ 

iJ^ivM 

V'r 

IMI 

